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Informist, Wednesday, Apr. 22, 2026

 

By Janwee Prajapati

 

MUMBAI – Overnight indexed swap rates ended higher on Wednesday, tracking a rise in crude oil prices, which rose near the key level of $100 per barrel due to escalating tensions in West Asia and uncertainties around the second round of peace talks between the US and Iran, dealers said. An overnight rise in US Treasury yields also pulled up swap rates, they said. Traders refrained from building aggressive positions, awaiting clarity on the continuance of the ceasefire in West Asia.

The one-year swap rate ended at 5.83%, up from 5.78% Tuesday. The five-year OIS rate ended at 6.43%, up from 6.36% Tuesday. The total notional trading volume of deals reported on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 414.25 billion, sharply up from INR 208.45 billion Tuesday. The overnight Mumbai Interbank Outright Rate was set at 5.38% Wednesday, up 20 basis points from Tuesday as the liquidity surplus fell amid outflows for goods and services tax payments. `

 

Iran's navy reportedly seized two ships in the Strait of Hormuz Wednesday. Following this, Brent crude oil futures for June delivery jumped to near $100 per barrel at 1700 IST, up from $95.30 at 1700 IST Tuesday. US President Donald Trump extended the ceasefire indefinitely Wednesday, hours ahead of its expiry. However, the Strait of Hormuz blockade is set to remain in place until the two sides reach a peace deal. Meanwhile, Iran's Foreign Minister Abbas Araghchi said blockading Iranian ports is an act of war and a violation of the ceasefire. 

Traders had expected a complete ceasefire between the two sides eventually, which had kept Brent crude oil prices near $95 per barrel till the end of Indian trading hours Tuesday. Some traders unwound their positions on the receiving side of the trade, as the latest developments in West Asia pushed crude oil prices near $100 per barrel, dealers said. As risk appetite was hit, foreign traders preferred safer bets and likely paid fixed rates following a rise in crude oil prices and US Treasury yields, dealers said. At 1700 IST, the benchmark 10-year US Treasury yield was at 4.28%, up from 4.26% at the end of Indian bond market trading hours Tuesday. Traders will track the movement of US Treasury yields after Kevin Warsh's Senate confirmation hearing to become the next chair of the US Federal Reserve. 

 

Back home, traders expect the rise in up to three-month swap rates to remain limited as they pared bets of a rate hike at least in the first half of the financial year 2026-27 (Apr-Mar) or until August, dealers said. The one-month, two-month and three-month swap rates ended only slightly higher than the previous closing levels.

   

"There was slight bullishness on a (US-Iran) deal, so that has gotten stopped out today," a market participant said. "It's most visible in the front end of the OIS curve, also fixings have gone up. MIBOR has been inching up these days, and it's just because of GST today, but the best of days for liquidity seems to be past us."

 

Traders also awaited the release of the Reserve Bank of India's Monetary Policy Committee's minutes for the April meeting. Some traders do not expect any significant impact of the MPC minutes on swap rates Thursday, dealers said. Traders expected the RBI governor's comments to be heavily data dependent and any change in rate view will depend on the unfolding of geopolitical events, dealers said. Most traders believe the MPC is unlikely to begin raising interest rates at least until the end of the calendar year 2026.  

 

"I don't think there will be any impact of (MPC) minutes... at this point it is irrelevant," a dealer at a primary dealership said. The governor had given a very clear rate outlook in his speech the previous day (Saturday), also. He will assess the geopolitical situation before any kind of preparation for a rate hike."  

 

OUTLOOK

On Thursday, traders will track developments in West Asia and their impact on crude oil prices. Traders will also track the Federal Open Market Committee meeting next week. Traders expect the rate-setting panel to hold US interest rates steady, dealers said. Fed fund futures are pricing in no change to the federal funds rate next week as inflation in the world's largest economy remains sticky.

 

The one-year swap rate already prices in three 25-bps repo rate hikes, bringing the rate to 6.00% by April 2027. Some traders believe the MPC will not raise the repo rate that much unless the West Asia conflict drags on, and they may therefore look to receive fixed rates, dealers said.

 

On Thursday, the one-year swap rate is seen at 5.60%-6.00% and the five-year swap at 6.20%-6.50%.

 

	At 1700 IST	TUESDAY
1-year OIS	5.83%	5.78%
2-year OIS	6.04%	5.99%
5-year OIS	6.43%	6.36%
2-year MIFOR	6.64%	6.63%
5-year MIFOR	6.96%	6.91%

 

End

 

US$1 = INR 93.80

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

 

Edited by Saji George Titus

 

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