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Informist, Friday, Apr. 4, 2025

MUMBAI – The two-day call rate on Saturday may open near the repo rate of 6.25% due to demand for funds from banks in early trade. As is usually the case on Saturday, call money market volumes may remain low. On Friday, the three-day call rate ended at 6.00%.

Government bonds and overnight indexed swap rates are not traded on Saturday. 

GOVERNMENT BONDS

On Monday, gilt prices may open steady as the much-awaited Reserve Bank of India's Monetary Policy Committee meeting begins, dealers said. The movement in US Treasury yields may also lend cues at the open. 

US government data released 1900 IST showed non-farm payrolls rose 228,000 in March, against a Dow Jones consensus estimate of 140,000. However, the unemployment rate rose to 4.2% from 4.1% in February. Traders await a speech by US Federal Reserve Chair Jerome Powell for further cues on the Federal Open Market Committee's rate cut trajectory.

Traders are likely to retain their bets on a repo rate cut and stance change by the RBI's rate-setting panel keeping prices buoyed till Wednesday, dealers said. 

Crude oil prices could also be a trigger for gilts if they move significantly, dealers said. A sharp movement of the rupee against the dollar could also provide cues. The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.44-6.53% during the day. On Friday, the 10-year gilt ended at INR 102.30, or 6.46%.

OIS RATES

On Monday, swap rates may take cues from the movement in US Treasury yields as US government data showed non-farm payrolls rose higher than expected in March, dealers said. The movement in government bond yields on may also lend cues to swap rates.

Short-term swaps will closely track the movement in the overnight MIBOR, with the RBI's liquidity measures seen keeping the rate near the repo rate of 6.25%, dealers said. Any further improvement in liquidity conditions will also be closely tracked by traders.

Crude oil prices could also be a trigger for swaps if they move significantly, with a fall Thursday also aiding swaps, dealers said. Any sharp movement in the rupee's dollar exchange rate may also provide cues. The one-year swap rate is seen at 5.95-6.06% and the five-year rate at 5.75-5.88%. On Friday, the one-year swap rate ended at 5.91% and the five-year swap rate closed at 5.73%.

RBI AUCTION 

--Nil

LIQUIDITY

--Total net inflows of INR 8.68 billion. The calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and reverse repo operations.

* Inflows

--INR 8.68 billion as coupon on state bonds

* Outflows

--Nil

End

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

Reported by Srijita Bose

Edited by Akul Nishant Akhoury

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