On Saturday, RBI Governor Raghuram Rajan told the RBI staff that he will return to academia after his term with the RBI ends on September 4. There were some negative reactions in the local markets as the exit of Rajan might trigger uncertainty in the market before the UK’s EU referendum on June 23.

Meanwhile, a more steady market confidence might help alleviate the impact at present. During Rajan’s tenure in the last three years, the Reserve Bank of India has steadied the rupee and reduced retail inflation to lower than six percent.

Even if the USD/INR spot is trading at about 66-67 level, risk reversal of the pair has continued to be low in recent times. In the meantime, India’s foreign reserves increased to USD 363.2 billion as of June 10 from USD 274.8 billion when Rajan took over as RBI governor three years ago.

As the RBI kept the rates unchanged on June 7 because of a rise in May inflation, the chances for a reduction on August 9 will depend on the country’s inflation figure for June that will be released in mid-July, said Scotiabank in a research report.

However, there is a rising possibility of the central bank cutting rate by 25 basis points during its monetary policy meeting in October as the new governor is expected to be pro-government, added Scotiabank. According to Finance Minister Arun Jaitley, announcement of the name of new governor would be made shortly.

Rajan’s decision to leave the RBI might lead to concerns amongst foreign investors. But the new governor would be required to improve their sentiments in India’s financial markets and the real economy, noted Scotiabank.

Through FCNR (B) deposits, around USD 27 billion was raised between September and November of 2013 that will mature beginning from September 2016. On June 7, Rajan had mentioned that the RBI might step in to supply dollars in case of extreme volatility. The impact is likely to be under control, according to Scotiabank.