More Stories

Informist, Friday, Jun. 12, 2026

 

--India's 1-year OIS ends at 5.9650% Fri, lowest since May 8 

--India's 5-year OIS ends at 6.3375% Fri, lowest since Apr 15 

 

By Cassandra Carvalho

 

MUMBAI – Overnight indexed swap rates ended sharply lower Friday, as Brent crude oil futures for delivery in August hit a three-month low of $85.80 per barrel during the day, dealers said. India's CPI inflation for May, released at 1600 IST, also allayed some fears of a repo rate hike by the Reserve Bank of India's Monetary Policy Committee in August, dealers said. 

 

The one-year swap rate ended at 5.97% Friday, the lowest since May 8 and down from 6.03% Thursday. The rate fell below its 50-day moving average after more than three months, which triggered a further fall Friday, dealers said. 

 

The five-year OIS rate ended at its lowest level since Apr. 15, at 6.34%, down from 6.43% on Thursday. The one-year, two-year, and five-year swap rates have fallen by 7 basis points, 12 bps and 20 bps this week, respectively. The total notional trading volume reported on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 767.20 billion, more than double the INR 363.20 billion reported on Thursday.

 

"Until yesterday, or till today (Friday), even with crude falling, I would've thought OIS (curve) would flatten," a dealer at a private sector bank said. "But after CPI (for May), RBI will need some blockbuster inflation print to justify a (rate) hike, so I think we will see some steepening now."

 

India's CPI inflation for May was lower than expected at 3.93%, inching closer to the RBI's medium-term inflation target of 4%. The lower-than-expected print is despite the Centre hiking retail fuel prices four times last month. An Informist Poll had estimated headline inflation at 4%. Core inflation was also within view at 3.8% last month. However, swaps pulled back from the day's lows as traders trimmed risk exposure ahead of the weekend amid uncertainty over whether a US-Iran deal would be cemented. 

 

Some traders, especially domestic banks, unwound their paid fixed-rate contracts tracking a fall in oil prices, on hopes of a peace deal. Near-month Brent crude futures were $87.10 per barrel at 1700 IST, down from $89.30 at 0900 IST, and down from $92.24 per barrel at the end of swap market hours Thursday. Some traders unwound rate-hike bets in the near term, aiding a fall in short-term rates as well. Some offshore traders took the opportunity to pay fixed rates due to the fall in rates. A downward momentum is expected in swaps over the next 60 days, dealers said, as foreign inflows are expected to buoy the macroeconomic outlook. 

 

"October is when the macro changes," a dealer at another private sector bank said. "But until then, inflation, growth, the flows are likely to support (a fall in swaps), but after that we'll see effects of El Nio and supply chain disruptions, while G-sec could also see more supply." Thus, some traders expect the swap rate curve to steepen, while others expect a flattening as the oil shock is seen hitting the short-term outlook more than the longer-term, they said.

 

OUTLOOK

Several traders expect the US and Iran to seal a peace deal over the weekend, and if this materialises, swap rates could fall. However, swaps have largely priced in this possibility and are more likely to see a larger rise on Monday if the deal does not happen. 

 

Crude oil prices have not risen above $100 per barrel since May 26, despite the US and Iran resuming strikes in the Gulf, allaying some fears of a further rise, dealers said. A likely liquidity boost due to the RBI's measures to shore up capital could temper a rise in short-term rates, dealers said. Traders have differing views on rate hikes, with a few expecting one as early as August. However, the CPI print released Friday tempered some of those bets. 

 

Traders will also track the movement of US Treasury yields ahead of the outcome of the US Federal Open Market Committee's first meeting under newly appointed chair Kevin Warsh next week, where a status quo on interest rates is expected, but concerns about the central bank's independence persist.

 

Traders will also track any development on the inclusion of Indian government bonds on Bloomberg Index Services' flagship Global Aggregate Index after the RBI and the Centre unveiled a slew of measures to improve foreign inflows earlier this month, dealers said. Government sources said that such measures were intended to secure the inclusion. Bloomberg, which deferred its decision on the inclusion of Indian bonds in January, said it plans to provide the next update on the potential inclusion by mid-2026. The review could be as soon as next week, dealers said. The movement of the rupee could also lend cues. The one-year swap rate is seen at 5.85-6.20% and the five-year at 6.20-6.50%.

 

	At 1700 IST	THURSDAY
1-year OIS	5.97%	6.03%
2-year OIS	6.12%	6.20%
5-year OIS	6.34%	6.43%
2-year MIFOR	6.65%	6.69%
5-year MIFOR	6.87%	6.91%

 

End

 

US$1 = INR 95.11

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

 

Edited by Saji George Titus

 

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. 2026. All rights reserved.