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Informist, Tuesday, Nov. 4, 2025

 

By Srijita Bose

 

MUMBAI – Overnight indexed swap rates ended higher Tuesday as offshore traders paid fixed rates as expectations of interest rate cuts both domestically and in the US dwindled, dealers said. 

 

The one-year swap rate ended at 5.48%, compared with 5.47% on Monday. The five-year swap rate ended at 5.70%, up from 5.68% on Monday. The total notional trade volume on Clearing Corp. of India's derivatives trading platform was INR 380.35 billion, up from INR 205.55 billion Monday.

 

Foreign portfolio investors and traders at foreign banks are likely to have paid fixed rates to unwind bets they had earlier received, dealers said. Offshore traders also likely sold India's government bonds while paying fixed rates in OIS, they said. This was due to expectations of further rate cuts by the Reserve Bank of India's Monetary Policy Committee and the US Federal Open Market Committee in December fading, dealers said.

 

"There was paying by offshore guys, only some people are unwinding bets," a dealer at a private sector bank said. "There was selling in gilts as well because of that." 

 

Uncertainty over the trade deal with the US also weighed on sentiment. Traders await fresh economic data, such as CPI inflation for October and GDP growth data for Jul-Sept, for further cues on rates. 

 

"Today it (rates) held the 5.70% level because these are also good levels to receive if you have a rate view," a dealer at a primary dealership said. "But no one is going aggressive, so since offshore flows were on the paying side, the bias was clearly there across all tenures."

 

While current rates in the five-year OIS were seen as attractive for traders still hoping for a rate cut in December, they preferred sitting on the sidelines rather than placing any fresh bets, dealers said. However, some domestic traders continued to receive fixed rates on OIS, limiting the five-year swap rate from rising sharply above 5.70%, they said. 

 

OUTLOOK

Markets are shut on Wednesday for Guru Nanak Jayanti. On Thursday, swap rates are likely to track movements in the US Treasury yields at open. Any sharp movement in Indian government bond yields could also lend cues to swaps, dealers said. Traders will also track developments in India-US trade talks.

 

On the data front, traders await domestic CPI inflation for October, due on Nov. 12. Traders have largely priced in a low CPI print, but the impact of the Centre's cut in goods and services tax rates, which took effect on Sept. 22, is yet to be ascertained, dealers said. GDP growth data for Jul-Sept, due on Nov. 28, will also be tracked. There is no immediate domestic data scheduled 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 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	MONDAY
1-year OIS	5.48%	5.47%
2-year OIS	5.44%	5.44%
5-year OIS	5.70%	5.68%
2-year MIFOR	5.79%	5.81%
5-year MIFOR	6.23%	6.24%

 

End

 

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

 

Edited by Saji George Titus

 

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