6  BIS central bankers’ speeches  At the time when the tapering was announced, domestic concerns pertaining to high CAD, low growth, high fiscal deficit, high inflation and policy uncertainty were already major concerns for foreign investors. This apparently amplified the impact of tapering announcement on foreign flows to India which in turn caused downward pressure on the Indian rupee.
It is important to get the timing right: too late and a lot of damage can be done; too soon and the side-effects may be worse than the hoped-for effect (if the source of the problem has been exaggerated or misdiagnosed). And the communications issues are more challenging than the finely-honed practice of monthly announcements by inflation targeting central banks.