The currency firmed briefly, but later resumed its slide, in what investors say is a sign that such steps may be unable to stem the decline without an outright rate
The data shows that outright rate adjustments on at-call deposits by an individual ADI often lead to other ADIs making changes to their own interest rates across their retail at-call deposit product offering.
Despite outright rates starting to steadily decline, it took two years to April 2014 for the three month product rate to go below its HP trend, whereas the three year deposit rate went below its HP trend a year earlier in July 2013.
At a product level, analysis of individual bank pricing data for at-call investment deposits show that there is clustering in the outright rates offered by the ADIs within the sample through the time series, especially within the study's subsets.
"If April inflation decelerates further from Friday's already lower-than-expected inflation print, the monetary authorities would have a more difficult time justifying an early rate hike and would likely push back outright rate
The Turkish central bank had for months been struggling to defend the lira by burning through its currency reserves and trying to squeeze up borrowing costs on the margins without resorting to outright rate
In one of the world's most unorthodox policy mixes, the bank had been battling to support the weak lira with foreign exchange auctions, liquidity adjustments and verbal intervention while avoiding outright rate
Investors will be looking for more resolute steps from the RBI, such as an outright rate
hike that will increase the yield appeal of the rupee.
On the monetary side slower inflation (weekly CPI print yesterday suggests monthly CPI may come at 6.3-6.4% which is down from 6.9% in June) should open room for outright rate
cuts pretty soon (no strong view whether first cut will be in August or September, but either is very likely).
Going ahead, Poddar of Goldman Sachs expects " a higher than consensus 300 bps of effective policy rate increases in 2010, with 150 bp coming from outright rate
hikes, and 150 bps from moving rates gradually from the reverse repo to the repo window."
They are pushing for increased end-user charges, whether in the form of subscriber line charge increases, line item fees or outright rate
Some of the items in the CPI basket show rather persistent and troubling rates of increase, while others show equal persistence in their outright rates