Several challenges await Urjit Patel, 52, when he takes over as governor of the Reserve Bank of India (RBI) next month. Redemption of foreign currency non-resident (FCNR) deposits, inflation and weak bank balance sheets will test his ability to effectively steer the nation’s monetary policy.
While market participants expect a hawkish policy stance by the incoming central bank governor, they welcomed the continuity in India’s monetary policy and see his appointment as a positive for the markets over the medium to long term. That said, bonds, rupee and rate-sensitive stocks may open lower in a knee-jerk reaction on Monday.