Fed policy unlikely to have major impact on rupee

The Indian rupee has taken Wednesday's FOMC meeting in its stride, with the currency dropping only fractionally against the US dollar since then. 

Looking ahead, the economy is in much better shape to weather tighter US monetary policy than it was two years ago, meaning the risk of another currency crisis is low. 

Over a longer horizon, the rupee has appreciated by 1% since the start of 2015 to 62.5/$. It has been the best performing major EM currency during this time. 

Capital Economics notes...

• Looking ahead, we think that the actions of the Fed are now far less likely to have an impact on the rupee. For one thing, India has been a major beneficiary of lower oil prices. 
  
  
• The trade deficit narrowed sharply in the past few months, keeping the current account deficit in check. Meanwhile, foreign inflows into equities remain strong.