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Informist, Wednesday, Apr. 15, 2026

By Janwee Prajapati

MUMBAI – Overnight indexed swap rates ended lower Wednesday tracking a fall in Brent crude oil prices on hope of fresh talks between the US and Iran, dealers said. The two warring nations agreed in principle to extend the two-week ceasefire that ends Apr. 22, according to a report by The Associated Press. A fall in US Treasury yields also brought down swap rates, dealers said. At 1700 IST, the benchmark 10-year US Treasury yield was 4.27%, from 4.34% at 1700 IST Monday.

The one-year swap rate ended at 5.76%, down from 5.84% Monday. The five-year OIS rate ended at 6.33%, down from 6.36% Monday. The total notional trading volume of deals reported on Clearing Corp. of India Ltd.'s derivatives trading platform rose to INR 704.75 billion Wednesday, sharply up from INR 319.90 billion in the previous session. Indian financial markets were shut Tuesday for Ambedkar Jayanti.

Swap rates fell after Brent crude oil futures for delivery in June fell below the key level of $100 per barrel on hope that negotiations between the US and Iran are likely to resume. Brent crude oil for June delivery was $96.10 per barrel at 1700 IST, down from $101.91 per barrel at the end of Indian market hours Monday.

"OIS movement (rise) before the policy (Monetary Policy Committee decision last week) was exaggerated. Now, there is some correction happening there (in OIS market)...," a dealer at a primary dealership said. "The OIS rates will mirror the fall in crude oil prices, so there are high chances of bond prices remaining up for sometime unless there is any negative development in the (US-Iran) war."

Traders said the spread between six-month swap rate and the overnight Mumbai Interbank Outright Rate was attractive to receive fixed rate contracts, dealers said. Traders do not expect the overnight MIBOR rate to rise above repo this month due to surplus liquidity in the banking system. Mutual funds were receiving fixed rates as they squared off their paid bets which they had taken earlier this financial year, dealers said. 

Foreign traders were likely on the sidelines as uncertainty on oil supply disruptions and the West Asia war clouded their risk appetite, dealers said. Some traders expect crude oil prices to rise above $100 per barrel and that even at $95 per barrel, crude prices would stoke inflation. WPI inflation print for March came in higher than expected. WPI inflation rose to a 38-month high of 3.88% in March, compared with 3.60% estimated in an Informist Poll, amid oil supply disruptions due to the war in West Asia. Swap rates recovered from a fall slightly after the data was released. 

Traders expect the RBI's Monetary Policy committee to hike rates only twice in the financial year 2026-27 (Apr-Mar) with the first cut starting from December. The rate-setting panel could hike rates by 25-50 basis points in 2026, which is lower than expectations in March of 75-125 basis points of hikes this calendar year, dealers said. 

OUTLOOK

Swap rates will Thursday track crude oil price movement and developments relating to West Asia, dealers said. Traders are betting that the US-Iran ceasefire will continue to hold on and that swap rates are over-pricing in rate hikes, making current levels attractive to receive fixed rate contracts, dealers said. Traders may also track US Treasury yields after US President Donald Trump said he would have to fire US Federal Reserve Chair Jerome Powell if the latter does not leave the Fed at the end of his term next month.

On Thursday, the one-year swap rate is seen at 5.70-6.00% and the five-year swap at 6.25-6.50%.

End

US$1 = INR 93.37

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

With inputs from Diksha Tripathy

Edited by Akul Nishant Akhoury

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