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Informist, Friday, Apr. 24, 2026

By Aaryan Khanna

NEW DELHI – Overnight indexed swap rates inched lower, reversing a rise from earlier on Friday, on reports the US and Iran will resume negotiations over the weekend, dealers said. The news led to a sharp fall in crude oil prices starting around 1630 IST. 

The one-year swap rate ended at 5.88%, down from 5.90% Thursday, easing from an intraday high of 5.93%. The five-year OIS rate ended at 6.47% after hitting a high of 6.55% intraday, falling from 6.49% the previous day. The total notional trading volume of deals reported on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 526.20 billion, lower than INR 623.10 billion Thursday.

News agencies Al Arabiya and Al Jazeera reported towards the close of Indian market hours that an Iranian delegation led by foreign minister Abbas Seyyed Araghchi will land in Islamabad, Pakistan, on Friday to continue negotiations with the US. After the first round of talks earlier in April were inconclusive, the second round of talks between the two parties has been uncertain. Brent crude for June delivery fell to $103.83 per barrel by 1700 IST after hitting a high of $107.48 a barrel during Indian market hours Friday as tensions between the two nations ramped up.

"News-based movement towards the end, that's all," a dealer at a private-sector bank said. "If there's a breakthrough it will be excellent news. Crude also fell so the market reacted."

The delay in the negotiations had led to crude oil prices surging past several key levels including $100 and $105 a barrel, pushing up swap rates since Wednesday. However, the rise was capped as traders who had paid fixed rates on the five-year swap rate near 6.30% were booking profits on Friday as the rate approached 6.55%, dealers said. The one-year swap rate also did not rise much Friday as it was already pricing in more than three rate hikes of 25 basis points each, with traders sanguine about a quicker pace of interest rate increases in India.

In an interview with financial daily Economic Times published Friday, RBI Deputy Governor in charge of monetary policy Poonam Gupta said that central banks could look through temporary supply-side inflation shocks as long as second-round effects and inflation expectations are in check. External Monetary Policy Committee member Ram Singh told the same paper that rate hikes were not on the cards, at least for now, similar to his comments in the minutes of the rate-setting panel's April meeting. 

"Risk-reward on higher OIS levels is very limited for traders despite Brent going up," a dealer at private-sector bank said. "It doesn't look like MPC will do panic rate hikes anytime soon, at least from the comments they are making."

OUTLOOK

Money markets are shut Saturday. On Monday, traders will track developments in the West Asia war and their impact on crude oil prices, dealers said. There are no interest rate cues scheduled domestically and swap rates will be very sensitive to global developments, they said. Progress on negotiations between the US and Iran is expected to drive down swap rates, with the five-year swap rate seen at around 6.40% if Brent crude futures subside below $100 a barrel.

The one-year swap rate already priced in three 25-bps repo rate hikes by April next year, which will bring the repo rate to 6.00%. Some traders were looking to receive fixed rates as they believed the MPC will not raise the repo rate that much unless the West Asia conflict drags on, dealers said. However, most traders avoided view-based positions due to uncertainty on the war and negotiations between the US and Iran on a peace deal, they said. 

Some traders also looked ahead to the rate decision and commentary from the US Federal Open Market Committee at next week's policy meeting, which may influence offshore activity in India's OIS market. Dealers expect the US rate-setting panel to hold interest rates steady. 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, according to the CME FedWatch tool.

On Monday, the one-year swap rate is seen at 5.50-6.00% and the five-year swap at 6.20-6.60%.

End

US$1 = INR 94.25

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

Edited by Deepshikha Bhardwaj

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