Financial market volatality unlikely to hurt INR much

Like many other EM currencies, the INR will likely face downward pressure from the Fed lift-off and the growing concern about the Chinese economy. Nonetheless, the INR looks like one of the least hurt currencies. 

"First of all, the 10-year yield spread to the US indicates room for a modest INR gain after the lift-off. Second, India's growth prospects and current account balance have improved a lot since the "taper tantrum". This makes the INR much less vulnerable to capital outflows", says Nordea Bank. 

Third, if the bad monsoon rains push up short-term inflation, the RBI might not cut rates. Finally, India has relatively limited trade ties with China, making it one of the few Asian economies little affected by the Chinese slowdown.