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Now on BBC News: All the latest business news live from Singapore. | :00:00. | :00:14. | |
No second term. India's central-bank chief will step down in September | :00:15. | :00:23. | |
after serving out 14 year term. And there is a long list of potential | :00:24. | :00:27. | |
candidates to replace him. And the countdown is on to a crucial vote on | :00:28. | :00:37. | |
Thursday. What would Brexit mean for Japanese countries doing business in | :00:38. | :00:43. | |
the UK? Welcome to Asia Business Report, with me, Mariko Oi, in | :00:44. | :00:49. | |
Singapore. He is one of the most outspoken and colourful of central | :00:50. | :00:54. | |
bankers, at the head of the Reserve Bank of India, Raghuram Rajan, is | :00:55. | :00:58. | |
leaving the post. There had been plenty of speculation about his | :00:59. | :01:01. | |
future, and last weekend he announced he would not be signing up | :01:02. | :01:03. | |
for a second term when his contract ends in September. Our correspondent | :01:04. | :01:11. | |
has more from Mumbai. Raghuram Rajan's decision to leave the | :01:12. | :01:14. | |
Reserve Bank of India has become a big talking point. He was the -- he | :01:15. | :01:24. | |
announced his retirement over the weekend. He took office three years | :01:25. | :01:28. | |
ago. And now his departure has thrown up lots of questions. | :01:29. | :01:36. | |
Raghuram Rajan has said he had been opened to the idea of continuing, | :01:37. | :01:40. | |
but took the decision after due reflection and consultation with the | :01:41. | :01:45. | |
government. Those comments will certainly increase suspicion in some | :01:46. | :01:51. | |
camps that he was told he was to go. He had plenty of public detractors. | :01:52. | :01:54. | |
Some politicians and business leaders say that interest rates have | :01:55. | :01:58. | |
not come down fast enough, and there have been personal attacks as well, | :01:59. | :02:02. | |
including from a senior leader from the ruling BJP. While most central | :02:03. | :02:11. | |
bankers refer -- prefer to stay low profile, Raghuram Rajan rarely did. | :02:12. | :02:15. | |
He called for tolerance after a Muslim was lynched for allegedly | :02:16. | :02:18. | |
eating beef and while India is the fastest-growing economy in the | :02:19. | :02:21. | |
world, with GDP growing at around eight cents, he has cast doubt over | :02:22. | :02:28. | |
the reliability of those numbers. Whether he walked or was pushed, | :02:29. | :02:34. | |
Raghuram Rajan's departure will be damaging for India at least in the | :02:35. | :02:37. | |
short term. He was seen as truly independent of the government and | :02:38. | :02:40. | |
that is something that helped him win the confidence of both domestic | :02:41. | :02:44. | |
and global investors. Pretty important at a time when investments | :02:45. | :02:49. | |
are so crucial for India's economic growth, and most expect India's | :02:50. | :02:54. | |
markets, which are already pretty volatile, to tumble when they open | :02:55. | :03:00. | |
on Monday. Seven or eight names are already being discussed as possible | :03:01. | :03:04. | |
replacements, but whoever gets the job will have to stay confidently -- | :03:05. | :03:09. | |
stay confidently why they are better at the job than Raghuram Rajan and | :03:10. | :03:13. | |
what they would do differently. As for the man himself is back to the | :03:14. | :03:16. | |
University of Chicago for now. But he has often been talked about as a | :03:17. | :03:20. | |
possible head of the International Monetary Fund, an organisation where | :03:21. | :03:24. | |
he was once the chief economist. While that job is not available | :03:25. | :03:28. | |
right now, that is one that would be difficult for him to turn down if | :03:29. | :03:35. | |
offered in the future. We will be analysing the impact of Raghuram | :03:36. | :03:42. | |
Rajan's decision to step down as central bank of India Governor | :03:43. | :03:49. | |
later. In other news:, the Chinese president Xi Jinping has arrived in | :03:50. | :03:52. | |
Poland as part of a three nation tour aimed at strengthening ties | :03:53. | :03:56. | |
between China and Europe. The Chinese president will be meeting | :03:57. | :03:59. | |
with his counterpart in Warsaw as well as the country's Prime | :04:00. | :04:03. | |
Minister. The two sides are expected to sign agreements in areas such as | :04:04. | :04:07. | |
finance, civil aviation and migration. Bilateral trade between | :04:08. | :04:12. | |
China and Poland reached $17 billion last year. Before Poland, Xi Jinping | :04:13. | :04:16. | |
was in Serbia and will be having to Uzbekistan next. The strong Japanese | :04:17. | :04:23. | |
currency, the yen, is curbing demand for its exports, as data this | :04:24. | :04:27. | |
morning showed an 11% drop for the month of May compared to the same | :04:28. | :04:31. | |
period last year. Week demand from emerging markets was also cited as | :04:32. | :04:36. | |
one reason for the dip. Meanwhile, imports also slowed, falling by | :04:37. | :04:40. | |
nearly 14%. The latest trade figures leave Japan with a deficit amounting | :04:41. | :04:47. | |
to $390 million. Staying with a pan, because more than 1000 Japanese | :04:48. | :04:50. | |
countries have operations in the UK, including heavyweights such as | :04:51. | :04:56. | |
medicine and the touchy, and these companies have more than 100,000 | :04:57. | :04:59. | |
employees working for them all over the country -- Nissan. So as a | :05:00. | :05:03. | |
result a lot of attention as you can imagine on a major vote taking place | :05:04. | :05:07. | |
on Thursday over whether Britain will stay or leave the European | :05:08. | :05:11. | |
Union. The preferred choice from the Japanese side, as it seems, is for | :05:12. | :05:16. | |
Britain to remain in the EU. Let's hear what some of the business | :05:17. | :05:19. | |
leaders told the BBC ahead of the vote. If Brexit is agreed, it would | :05:20. | :05:30. | |
have a significant, serious impact on the global economy. TRANSLATION: | :05:31. | :05:35. | |
Hitachi has been investing in the UK's infrastructure and nuclear | :05:36. | :05:37. | |
industries, because the UK as part of the EU, so I oppose Brexit. At | :05:38. | :05:44. | |
the UK end up leaving the European Union, it will most likely lead to a | :05:45. | :05:47. | |
major shakeup for businesses. Earlier I spoke to Simon Black from | :05:48. | :05:54. | |
Tokyo. He has been advising clients about the upcoming referendum. Japan | :05:55. | :05:57. | |
is the number-1 investor in the UK outside the US, foreign investor, | :05:58. | :06:03. | |
and the access to the single market is a huge factor why Japanese | :06:04. | :06:07. | |
businesses have established themselves in the UK. But beyond the | :06:08. | :06:12. | |
relationship with the single market, it is the economic and political | :06:13. | :06:16. | |
uncertainty I think that the Brexit vote would trigger that is a major | :06:17. | :06:20. | |
concern for Japanese businesses. So tell us, how would it affect you, | :06:21. | :06:26. | |
should the Brexit happen, how would it affect business operations for | :06:27. | :06:30. | |
Japanese companies, assuming that many of them have their European | :06:31. | :06:34. | |
headquarters in London? Well, I think for existing operations there | :06:35. | :06:39. | |
will be probably a limited initial impact, and companies will assess | :06:40. | :06:46. | |
the post Brexit scenario and there are various options that could play | :06:47. | :06:50. | |
out. And I think Japanese businesses will take their time to assess the | :06:51. | :06:54. | |
situation. They will want the best access to information, they will | :06:55. | :06:58. | |
want to engage in some lobbying but I think it is really for new | :06:59. | :07:01. | |
investment that there will be the major initial impact, because there | :07:02. | :07:05. | |
is going to be uncertainty and for new investment they are going to | :07:06. | :07:08. | |
have a higher hurdle to jump over, if you like. But I don't expect that | :07:09. | :07:13. | |
the Japanese businesses will make very dramatic changes initially. I | :07:14. | :07:18. | |
think they will let the scenarios play out, they will analyse it. | :07:19. | :07:24. | |
There are many reasons why company headquarters would be in London, | :07:25. | :07:29. | |
access to the market is one, the city of London is another, the | :07:30. | :07:32. | |
attractiveness of employment opportunities, all of those things | :07:33. | :07:35. | |
are major reasons why the Japanese have chosen the UK and they are not | :07:36. | :07:41. | |
necessarily initially affected by Brexit. Of course, Japan is not the | :07:42. | :07:46. | |
only country with corporate interest in the UK. Other Asian economies | :07:47. | :07:49. | |
would also be affected should the UK leave the European Union. In fact, | :07:50. | :07:53. | |
we're already seeing some impact on region's currency. Earlier I spoke | :07:54. | :08:00. | |
with someone who specialises in Asia-Pacific currencies. Well, if | :08:01. | :08:05. | |
the UK wants to leave the European Union we will see a spike in global | :08:06. | :08:10. | |
risk aversion and high volatility. So in terms of other currencies in | :08:11. | :08:14. | |
Asia, I currencies such as the Korean, the Indonesian, and the | :08:15. | :08:20. | |
Malaysian will likely depreciate against the US dollar more than the | :08:21. | :08:23. | |
others and the reason for that is that South Korea is one of the most | :08:24. | :08:27. | |
open economies in Asia. So therefore there are currency tends to put | :08:28. | :08:32. | |
reflect market sentiment more closely. -- tends to reflect. In | :08:33. | :08:37. | |
terms of Malaysia and Indonesia are those countries have higher levels | :08:38. | :08:41. | |
of government debt so a spike in risk aversion would mean capital | :08:42. | :08:45. | |
would flow out of these markets more than the others. There has been a | :08:46. | :08:49. | |
lot of uncertainty in the markets, not just the Brexit but also the | :08:50. | :08:55. | |
Federal Reserve, the US central bank's interest rates. What have | :08:56. | :08:58. | |
been the major factors? Well, I think the Fed seems more cautious | :08:59. | :09:05. | |
now. And I don't think a rate hike is imminent so therefore it is going | :09:06. | :09:09. | |
to be interesting to see how this plays out. If we see the UK, for | :09:10. | :09:14. | |
example, voting to stay in the European Union, I could see a spike | :09:15. | :09:20. | |
in risk appetite globally. And therefore, in that kind of | :09:21. | :09:23. | |
environment I don't think there is any reason for the yen to continue | :09:24. | :09:26. | |
to strengthen and vice-versa, of course, as well. In this rather | :09:27. | :09:34. | |
volatile market, are you seeing any countries, any currency is actually | :09:35. | :09:40. | |
having a positive? That is a good question. I think in the medium term | :09:41. | :09:44. | |
India has the ability to surprise on the positive side. And the reason | :09:45. | :09:48. | |
for that is that the economy is less export-oriented than its regional | :09:49. | :09:52. | |
peers. So therefore domestic policy-making can have a big impact | :09:53. | :09:57. | |
on the country's economic prospects. Us we had the central bank governor | :09:58. | :10:00. | |
announcing that he would step down. Do you think that would have an | :10:01. | :10:07. | |
impact? Well, India now enjoys high policy credibility and has a strong | :10:08. | :10:11. | |
monetary policy framework. So regardless of who becomes the next | :10:12. | :10:15. | |
governor, I would expect policy continuity in India. Let's take a | :10:16. | :10:20. | |
quick look at markets before we go, because Japan and Australia have | :10:21. | :10:23. | |
started trading for the week and they are actually higher. The UK up | :10:24. | :10:28. | |
by more than 2% but that is after losing some 6% last week because | :10:29. | :10:32. |