India's Rupee, Stocks Down As Central Bank Chief Quits

India's rupee plunged along with equities on Tuesday after the country's central bank chief quit following a dispute with the government that analysts say raises fears about its independence.

Mumbai, (UrduPoint / Pakistan Point News - 11th Dec, 2018 ) :India's rupee plunged along with equities on Tuesday after the country's central bank chief quit following a dispute with the government that analysts say raises 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 media reports have said he was annoyed by New Delhi's repeated efforts to impose its influence.

The rupee sank more than one percent to 72.19 to the Dollar, with speculation swirling that an RBI intervention kept it from falling further, while the benchmark Sensex in Mumbai slid 1.47 percent shortly after the opening bell.

Analysts say that Patel's departure, extremely rare for a central banker before the end of his term, is evidence that the RBI's autonomy is under threat.

"This is a clear signal of an eminent institution being attacked and its independence being chipped away one step at a time by the government," independent economist Ashutosh Datar told AFP.

"It is obvious Patel resigned because he faced a lot of pressure on issues such as bad loans, shadow banking, and the central bank's independence.

"This will reflect badly on the government and probably affect the central bank's sovereignty in the long run," he added.

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 clear-the-air talks three weeks ago.