INR opens 68.95 as against Fri close of 68.90 and may trade in range of 68.80 to 69.10
INR and select few currencies with relatively high yields are getting bond inflows from low yield markets like Europe, Japan and US. This is one of the most imp reason for INR stability. Without debt inflows, there is no reason for INR being stable ( poor economy, poor equities and worsening fiscal deficit prospects). But until inflows are there, importers are happy saving hedging cost.
With finance minister saying that India needs significant cut in interest rates and RBI following it (most likely) could mean that over next few months, indeed, interest rate may drop quite a bit. This would mean difference in Indian yields an yields of Europe etc may shrink. As a result, attractiveness of Indian bonds may also decline. At such a point, INR may see weakness and, possibly, good amount of it.
Today all Asian equities in losses. But Indian equities may see gains on back of finance minister statement to look at FPI concerns
For now, we continue to suggest import hedging, at dips, for few days and long term export hedging at levels above 69.0.