Rupee down by 1.6 per cent, bonds skid

In a clear signal of a major rift between the government and the central bank, Urjit Patel on Monday stepped down as RBI Governor, about nine months ahead of his three-year term as the head of the Indian banking sector regulator.

The rupee and bonds plunged as Reserve Bank of India Governor, Urjit Patel resigned post market hours on Monday, surprising many investors. Concerns about mixed results from crucial state elections also kept traders wary during Tuesday's trading session.

The rupee came-off from its earlier lows at Rs. 72.13 to the dollar after opening at Rs. 72.46, but was still sharply lower from its close of Rs. 71.35 on Monday. The 10-year benchmark bond yield rose to 7.64 per cent from 7.59 per cent at the previous close. The broader NSE stock index opened down 1.3 per cent but recovered some of its losses and was 0.9 per cent lower. Investors will wait for the state election results to gain trading cues during the day.

The RBI governor has resigned abruptly after a months-long tussle with the government raising concerns about the central bank's independence as the 2019 general election nears.