More Stories

Informist, Monday, Nov. 17, 2025

 

By Aaryan Khanna

 

NEW DELHI – Overnight indexed swap rates ended on a mixed note Monday. Short-term swap rates maturing in up to one year inched lower, tracking a fall in the overnight Mumbai Interbank Outright Rate and a corporate house receiving fixed rates, dealers said. A rise in US Treasury yields over the weekend and concern over further rate cuts in India pushed up the five-year swap, though traders said there was a lack of significant direction on domestic interest rates.

 

The one-year swap rate ended at 5.47%, against 5.48% Friday. The five-year swap rate ended at 5.76%, up from 5.74% Friday. The total notional trade volume on Clearing Corp. of India's derivatives trading platform was INR 297.40 billion, down sharply from INR 537.55 billion Friday.

 

Rate-sensitive swaps maturing in up to six months eased after some paying pressure Friday. The Reserve Bank of India's variable rate reverse repo auction Friday had led to the overnight MIBOR--floating leg of the OIS contract--shooting to 5.58% from 5.39%, above the repo rate of 5.50% for the first time this month. As the central bank refrained from making such an announcement, the overnight MIBOR eased back to 5.43% Monday.

 

"Not sure what is happening with MIBOR. They (the RBI) are managing liquidity in too much of a haphazard way," a dealer at a private-sector bank. "On Friday we had to deal with MIBOR above repo (rate) because they wanted a VRRR. Today (Monday) there's no announcement at all."

 

Traders said the one-year swap rate continued to reflect the possibility of another repo rate cut in the next 12 months. The market remains divided on whether the RBI's Monetary Policy Committee will cut rates at its upcoming December meeting despite inflation having fallen to a record low in October. The panel had cut the policy rate by 100 basis points to 5.50?tween February and June, and traders said it may have limited room to cut rates further as the uncertainty of the impact on GDP growth from US tariffs remains.

 

The uncertainty on rate cuts bloomed further after the release of India's trade data for October. The merchandise trade deficit rose to a record high of INR 41.68 billion as imports also hit an all-time high. Some traders were of the view that the RBI would not want to weaken the rupee further by easing monetary policy, which is typically detrimental to the local currency.

 

Offshore traders continued to pay fixed rates in the five-year segment. Most of these traders were likely reversing bets made earlier this year on India's OIS rates to fall, dealers said. Offshore traders and foreign banks were winding down their emerging market portfolios near the end of the calendar year, which is the close of their accounting year, dealers said.

 

"Offshore traders are squaring off positions, they are constantly paying, which you can see from the correction in the rate," a dealer at a primary dealership said. The five-year OIS rate has risen 14 bps over the past month as certainty of a December rate cut has faded. "Once the (corporate) receiving gets over, you'll see rates actually rise a bit more from here," the dealer said.

The movement in US Treasury yields ultimately had little impact on the OIS market by the end of the day, though some traders also preferred to pay fixed rates, noting that the 10-year US yield has been inching up, dealers said. The yield on the 10-year benchmark US Treasury note rose to 4.15% at 0900 IST Monday from 4.12% at 1700 IST Friday but was off the high at 4.13% at 1700 IST.

 

OUTLOOK

On Tuesday, swap rates are likely to track gilt and US Treasury yields at the market opening, dealers said. There were no domestic cues scheduled on the interest rate front overnight, which may limit the movement in rates.

 

Offshore traders may continue unwinding their received fixed rate positions, dealers said. Meanwhile, corporate houses are likely to receive swap rates of up to two years, as has been seen since last week. This is likely because a large corporate house is switching its interest rate bets to the onshore market from derivative instruments in the non-deliverable rupee.

 

Traders will also track geopolitical developments, especially regarding the India-US trade deal. Most traders expect more clarity on this front by the month-end. By that time, GDP data for the September quarter will also be out. India's GDP likely grew 7.2% in the September quarter, according to India Ratings and Research Pvt. Ltd.

 

Traders will also track systemic liquidity and the overnight MIBOR, dealers said. Traders may continue to trade in swaps maturing in under a year to adjust their rate-cut bets and bet on spreads between MIBOR and money market 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 5.40-5.55% and the five-year contract is seen at 5.68-5.80%.

 

	At 1700 IST	FRIDAY
1-year OIS	5.47%	5.48%
2-year OIS	5.47%	5.46%
5-year OIS	5.76%	5.74%
2-year MIFOR	5.84%	5.83%
5-year MIFOR	6.31%	6.30%

 

End

 

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

 

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.