INR opens weaker at 71.35 as against Friday close of 71.29 and may trade with a weak bias In range of 71.20 to 71.50. Today news came that income tax department is asking for reduction in direct tax collection target by a massive INR one trillion and it indicates govt will have challenges on the fiscal front. May be market has starting pricing this challenge and INR may trade with weak bias.
In other development, US yields have also started firming up and if US 10 year starts to trade above 2% Indian bond market attractiveness could reduce and this may create pressure on dollar inflows.
Today US market is closed. Asian equities are trading with losses and most other Asian currencies are also trading with weak bias.
We suggest to cover near term imports around 71.20 and wait for better levels to start covering exports