MUMBAI: India’s rupee plunged along with equities on Tuesday after the country’s central bank chief quit following a dispute with the government that has raised fears about its independence.
Urjit Patel stood down as governor of the Reserve Bank of India (RBI) on Monday evening following months of tensions with Prime Minister Narendra Modi’s government over interference in policy.
Patel cited “personal reasons” for his decision but experts and analysts have said he was annoyed by repeated efforts by New Delhi to impose its influence.
The rupee sank more than one per cent to 72.19 per dollar, with speculation swirling that an RBI intervention kept it from falling further, while the benchmark Sensex in Mumbai slid 1.47 per cent shortly after the opening bell.
The shock resignation comes after Patel’s deputy, Viral Acharya, warned the government in a strongly worded speech in October that undermining the bank’s independence could be “potentially catastrophic”.
Indian business dailies reported in October and November that the government had invoked never-before-used powers to send at least three letters to Patel seeking to direct policy.
Newspapers suggested Patel was close to quitting over the issue at the time, but the tensions were believed to have been diffused following talks three weeks ago. — AFP
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