INDIAN markets are set to open lower today after Reserve Bank of India (RBI) Governor Raghuram Rajan unexpectedly said he would step down in September, though the central bank is likely to step in to support the rupee, analysts and traders said.

    Traders predicted the rupee would likely fall by 0.15 to 0.20 rupees per dollar at the start of trading, but that the RBI would intervene to prevent excessive volatility.

    The rupee closed at 67.0775/67.0875 per dollar Friday.

    The 10-year benchmark bond yield was seen rising 3-5 basis points after closing at 7.50 percent Friday, while shares were forecast to fall at the open.

    Any volatility could be magnified given the surprise news that Rajan would step down after just one three-year term comes ahead of a U.K. referendum Thursday about whether to leave the European Union, which has kept global investors on tenterhooks.

    Still, analysts said markets would stabilize as investors await word on who will be appointed as the next RBI Governor, with RBI Deputy Governor Urjit Patel and State Bank of India chair Arundhati Bhattacharya seen as potential replacements.

    “There should be a knee-jerk reaction on the rupee,” said Ashtosh Raina, head of foreign exchange with HDFC Bank.

    Rajan, a former International Monetary Fund chief economist, has been popular with foreign investors for his efforts to tackle inflation and helping to rescue India from its worst crisis in more than two decades when he took the helm in 2013.

    But he has faced mounting criticism from a faction within Prime Minister Narendra Modi’s ruling party for keeping interest rates high and over a perception he had begun to stray into politics.(SD-Agencies)