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Informist, Thursday, Mar. 13, 2025

MUMBAI – Volume in the call money market islikely to be low on Saturday, and the two-day call rate may open below the repo rate. During the day, the call and triparty repo rates are seen in the range of 5.75-6.25%. On Thursday, the four-day call ended at 5.87%.

Money markets are shut on Friday for Holi. Government bonds and overnight indexed swap rates are not traded Saturday.

GOVERNMENT BONDS

On Monday, gilt prices are likely to take cues from the movement on US Treasury yields at opening. An ease in liquidity conditions could intensify April rate cut bets, with further bets on rate cuts in June or August also in traders' minds.

Traders may also assess developments related to US tariff policy and the rupee's movement against the dollar, dealers said. Crude oil prices could also be a trigger if they move significantly. The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.65-6.72% during the day. On Thursday, the bond settled at INR 100.65, or 6.70% yield. 

OIS RATES

On Monday, swap rates may take cues from the movement in US Treasury yields at open after the release of US weekly jobless claims, dealers said. While swap rates have not been closely tracking the movement of US Treasury yields, traders may take cues from offshore ahead of the US Federal Open Market Committee's meeting next week.

The FOMC, which is scheduled to meet on Mar. 18-19, is expected to hold rates steady this month. However, Fed fund futures are pricing in three rate cuts by the panel in 2025, so traders will closely watch for commentary from the committee, particularly US Federal Reserve Chair Jerome Powell.

Any statement by Trump on tariffs and their potential impact on global trade may also impact swap rates. Trump has said he will impose reciprocal tariffs on imports from countries such as India starting Apr. 2. Short-term swaps will closely track the movement in overnight Mumbai Interbank Offer Rates.

Crude oil prices could also be a trigger for swaps if they move significantly, dealers said. A sharp movement of the rupee against the dollar could also give cues to swaps. The one-year swap rate is seen at 6.08-6.20% and the five-year rate is seen at 5.90-6.03%. On Thursday, the one-year swap rate ended at 6.13% and the five-year swap rate closed at 5.97%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 100.98 billion. The calculation of flows does not take into account the redemption of the standing deposit facility and scheduled variable rate repo and reverse repo operations.

* Inflows

--INR 19.87 billion as coupon on state bonds on Friday

--INR 9.62 billion as coupon on state bonds on Saturday

--INR 21.58 billion as redemption of state bonds on Saturday

--INR 14.54 billion as coupon on 7.62%, 2039 gilt on Saturday

--INR 35.37 billion as coupon on 7.19%, 2060 gilt on Saturday

* Outflows
--Nil

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Srijita Bose

Edited by Deepshikha Bhardwaj

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