By Rajeev Malik of CLSA

The general drift in the financial trenches is that Governor Raghuram Rajan of the Reserve Bank of India (RBI) will stay on hold at the bank’s April 7 policy meeting. After all, he just cut rates – in a second consecutive out-of-meeting action – in early March. What’s more, consumer price inflation moved up in February; this will constrain the RBI from easing. Finally, following the surprise rate cut in January, the RBI had stayed on hold at its February policy meeting; it will repeat this behaviour next month.

For these reasons, hardly anyone expects a rate cut next week. However, valid as these arguments are, they are overshadowed by factors that make a stronger case for another cut. Read more

Introducing Raghuram Rajan, governor of the Reserve Bank of India (RBI), at an Independence Day lecture on Wednesday evening, Sajjan Jindal of JSW Steel said he felt ‘at peace’ since the former International Monetary Fund (IMF) economist took over at the central bank last year. That was at a time of turmoil, as a financial crisis swept through emerging markets and the rupee plummeted.

“You’re at peace but you still want lower interest rates,” quipped Rajan in response. “They’ll come.” Read more

Source: Reuters

The recent turmoil in emerging markets has hit India, reversing some of the the gains and optimism from the end of last year.

Early on Tuesday, the benchmark Sensex index was down 0.7 per cent to 20,062.48 in Mumbai, adding to significant losses in the last session and hovering around the psychological threshold of 20,000. That a level not seen since last October, although it has since recovered to be flat on the day.

It’s both global factors as well as news from home that are dragging India’s markets lower. Read more

Raghuram Rajan, governor of the Reserve Bank of India (pictured), rarely fails to surprise.

He wished everyone “happy new year” with a 25 basis point hike in the repo lending rate on Tuesday – bringing it to 8 per cent – and added the woeful statement that economic growth would lose momentum in the third quarter of the current financial year.

The decision to hike rates goes against expectations, with economists in a Reuters poll last week forecasting that Rajan would hold steady. Read more

Raghuram Rajan, the governor of India’s central bank, is keen on financial inclusion, an area where the country fares particular badly with around half the population without a bank account.

Perhaps one way of getting more Indian people and businesses into the financial system is to create basic banks that have no credit risk, but just take payments and deposits. Could it work? Read more

Over Christmas, the Reserve Bank of India (RBI) finally published a comment warning the public about the dangers of dabbling in Bitcoin. Raids have followed, forcing websites that trade the virtual currency to suspend operations.

Enthusiasts have long hailed Bitcoin as a panacea for India’s economic problems, from low rates of financial inclusion to an unsustainable demand for gold. But even the most zealous Bitcoin miners admit that the future of the virtual currency lies with the regulator – which seems to be wary. Read more

Surprise! On Wednesday, India’s central bank kept the repo lending rate steady at 7.75 per cent and the cash reserve ratio at 4 per cent.

That went against the expectations of investors, analysts and economists who thought Raghuram Rajan, the governor of the Reserve Bank of India, would raise interest rates once again to crack the whip on inflation. Read more

Counting them

India’s November inflation – the Wholesale Price Index version – is out and, once again, the news is worse than expected.

Year-on-year prices were up 7.52 per cent, compared with the 7 per cent forecast by Bloomberg and clocked in the previous month. Along with the Consumer Price Index (CPI) data released last week, it suggests the Reserve Bank of India (RBI) will indeed hike the repo lending rate on Wednesday. Read more

The Reserve Bank of India is providing Rs50bn ($800m) to small enterprises for refinancing, a boost to businesses that are suffering from tight liquidity as Asia’s third largest economy slows. Read more

Raghuram Rajan, India’s new central bank governor, faces a nervous few days as he waits for Federal Reserve tapering news later on Wednesday and ponders a tricky interest rate decision on Friday. But at least one of his initial wheezes, to support the rupee by attracting dollars from Indians living abroad, seems to be working out nicely – thanks in large part to the efforts of western banks.

 Read more

By Hemindra Hazari of Nirmal Bang Institutional Equities

Since Raghuram Rajan took over as governor of the Reserve Bank of India on September 4, the battered rupee and India’s badly bruised stock and bond markets have staged a sharp recovery. Markets, it seems, believe the governor can restore confidence and revive inflows of foreign capital. Read more

What to make of the “big bang” from incoming governor of the Reserve Bank of India, Raghuram Rajan, as he announced a set of unexpected reforms on his first day in office?

Well, the markets have given the ex-IMF economist the thumbs up. The rupee was up 1.5 per cent to 66 to the US dollar on Thursday morning, while the benchmark Sensex index rallied 2.2 per cent to 18,971.03. Read more

Rajan arrives at the RBI

New RBI governor Raghuram Rajan’s first day in the job saw the rupee flirt with its all-time record low to the dollar, going beyond 68.6 before strengthening on Wednesday to around 67.1.

While all-time rupee records have been somewhat commonplace in the last month, it’s a reminder that Rajan faces quite a set of economic challenges, the rupee being one of the most pressing (see chart after the break). Read more

There is no concept in economics akin to a baptism of fire but that is surely what awaits incoming Indian central bank governor Raghuram Rajan as he ponders what, if anything, can be done to protect his country’s ever-sinking currency, writes James Crabtree.

The rupee has lost more than a tenth of its value since May when remarks by US Federal Reserve governor Ben Bernanke first prompted investors to pull back from emerging markets, especially those like India encumbered by dangerously high current account deficits.

 Read more

By Taimur Baig of Deutsche Bank

India should consider itself lucky to have a man of Raghuram Rajan’s intellectual prowess to head its central bank, as announced this week, at such a precarious moment. Rajan will need all his academic and operational experience (professor at the University of Chicago, chief economist at the IMF, chief economic advisor at the India’s finance ministry) to rise to the occasion. He will also need one more attribute that I will discuss at the end of this piece. Read more

A snap view of what the markets think of Raghuram Rajan and the task awaiting him as he prepares to take on the top job at India’s central bank. Read more

Before Raghuram Rajan takes up the top job at the Reserve Bank of India, what can we tell from his own writing about what kind of governor he will be?

In other words: what advice has he been dishing out, now he’ll be on the receiving end? Read more

The new governor of India’s central bank has built a reputation as a world-class economist during a quarter century of teaching and writing – helped along by one explosive speech in 2005. Here is a potted biography in six short chapters. Read more