India IRS Review
End down as traders receive fixed rates as gilt ylds fall
This story was originally published at 18:55 IST on 31 October 2025
Register to read our real-time news.Informist, Friday, Oct. 31, 2025
By Srijita Bose
MUMBAI – Overnight indexed swap rates ended lower Friday, tracking the fall in government bond yields, dealers said. Traders also received fixed rates as they held on to their bets on a domestic rate cut following the rise in swap rates on Thursday, they said.
The one-year swap rate ended at 5.48%, flat against Thursday. The five-year swap rate ended at 5.67%, against 5.69% on Thursday. The total notional trade volume on Clearing Corp. of India's derivatives trading platform was INR 394.20 billion, up from INR 358.65 billion on Thursday.
"In the morning there was a paying pressure," a dealer at a private sector bank said. "Only after the (gilts) auction we saw a simultaneous move in both gilts and thereby in OIS."
Traders who had taken short bets in gilts earlier in the day, covered those bets after the Reserve Bank of India did not accept any bids for the sale of the seven-year gilt at the auction, dealers said. The RBI's cancellation of the seven-year bond was seen signalling that yields ought to be lower than the existing levels, dealers said. Traders received fixed rates in swaps while buying gilts, they said.
Traders also continued to receive swaps to bet on a rate cut by the Reserve Bank of India's Monetary Policy Committee, dealers said. "The exposure and volatility in gilts is much more than swaps right now," a dealer at a primary dealership said. "But there was paying in morning because of FRA demand in 30-year gilts."
However, in early trade, swaps traded higher as traders paid fixed rates to hedge against forward rate agreements on gilts, dealers said. Offshore traders continued to pay fixed rates in swaps as the 10-year US Treasury yield remained near 4.10%. Reduced chances of a rate cut by the Federal Open Market Committee in December after hawkish comments by Federal Reserve Chair Jerome Powell late Wednesday also led traders to pay fixed rates, dealers said.
OUTLOOK
Swaps are not traded on Saturdays. On Monday, swap rates may track movement in US Treasury yields. Any sharp movement in government bond yields could also lend cues to swaps, dealers said. Traders will also track developments in India-US trade talks.
There is no immediate data scheduled on the domestic front that is likely to have a significant impact on swap rates, dealers said. Swaps may also track the rupee's movement against the dollar and of crude oil prices. The one-year swap rate is seen in the range of 5.38-5.52% and the five-year contract is seen at 5.55-5.74%.
At 1700 IST | THURSDAY | |
1-year OIS | 5.48% | 5.48% |
2-year OIS | 5.43% | 5.44% |
5-year OIS | 5.67% | 5.69% |
2-year MIFOR | 5.83% | 5.83% |
5-year MIFOR | 6.25% | 6.25% |
End
Edited by Deepshikha Bhardwaj
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