An abrupt increase in interest rates would put pressure on banks – their funding costs would go up, and their interest income would rise at a slower pace initially. An abrupt rise in interest rates would also send valuations down from their current high levels and thus cause losses.
While exchange rate flexibility would ease the burden of adjustment, countries that find themselves with appreciating currencies in response to developments elsewhere find it extremely uncomfortable as well. Countries with stable macroeconomic environments are better placed to shield themselves, but it is almost a truism that no country can actually escape the fall out of the global uncertainties that are currently prevailing.