More Stories

Informist, Monday, Aug. 17, 2026

 

NEW DELHI – Government bond prices and overnight indexed swap rates will take direction Tuesday from movement in US Treasury yields. Traders do not expect a further impact on gilt prices or OIS rates from the Reserve Bank of India's decision to close its special foreign currency non-resident (banks) deposit window early, and domestic markets would react more to adverse global cues, they said.

 

After market hours, US President Donald Trump threatened to bomb Oman if it interfered in negotiations between the US and Iran. There was no impact on either US yields or crude oil prices at 2050 IST after the statement. Meanwhile, after the knee-jerk rise in bond yields following the RBI's announcement Friday, traders will be on watch for foreign inflows and their impact on systemic liquidity and whether these flows are deployed into gilts.

 

Meanwhile, the one-day interbank call money rate is seen opening near the Reserve Bank of India's repo rate of 5.25% due to early demand for funds from primary dealerships, dealers said. Dealers expect the one-day call rate at 4.60–5.30% Tuesday.

 

GOVERNMENT BONDS

Tuesday, gilts are seen tracking the overnight movement in US Treasury yields and crude oil prices, dealers said. Brent crude oil price changed little. Some traders fear crude oil could hitting $90 per barrel, but most have largely priced in crude oil moving in the range of $80-$90 per barrel.

 

After the knee-jerk rise in bond yields following the RBI's announcement of closing the FCNR(B) swap window earlier than scheduled, traders will be on watch for foreign inflows and their impact on systemic liquidity and whether these flows are deployed into gilts. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 6.72% and 6.85%, dealers said. Monday, the bond ended at INR 100.92 or 6.8071% yield.

 

Any significant movement in the rupee and swap rates will also lend cues, they said. Traders will also track the results of the INR 202-billion state bond auction.

 

OIS RATES

Tuesday, swap rates are expected to take cues from movements in crude oil price and US Treasury yields following overnight developments in the war in West Asia, dealers said. After a sharp rise Monday following the RBI's announcement of early closure of the special FCNR(B) scheme, traders do not expect OIS rates to rise further based on that trigger, they said. 

 

Higher crude oil prices and US Treasury yields are a concern for traders as these may prompt the RBI's Monetary Policy Committee to raise interest rates. The movement of the rupee and overnight borrowing rates will also lend cues. If global cues turn adverse, the five-year OIS may once again top 6.40%, as the scope to receive fixed rates from domestic traders will be lower with the scheme ending sooner, dealers said.

 

Traders had expected foreign inflows to top $100 billion, with FCNR(B) deposits leading the inflows. They had, therefore, expected ample durable liquidity in the banking system. That expectation has now been trimmed, dealers said. Several banks had plans in place to raise such deposits through leveraging in September.

 

Some traders are also looking ahead to the release of the minutes of the US and India monetary policy decisions. Bets on a US rate hike at the next policy meeting in September have faded over the past three weeks, while traders continue to expect the RBI's rate-setting panel to remain sanguine on inflation. Both releases are due after market hours Wednesday.

 

Tuesday, the one-year swap rate is seen in the range of 5.65-6.00% and the five-year at 6.20-6.42%. Monday, the one-year swap rate ended at 5.79% and the five-year rate ended at 6.34%.

 

CALL

Tuesday, the one-day interbank call money rate is expected to open near the RBI's repo rate of 5.25% on early demand for funds from primary dealers. Monday, the one-day call rate ended at 5.20%.

 

The RBI will conduct an overnight variable rate reverse repo auction for INR 1.50 trillion at 0930-1000 IST Tuesday, which should be subscribed well as traders roll over their subscriptions, dealers said. Traders have begun watching for any drain in liquidity through currency in circulation ahead of the festival season.

 

Liquidity is seen to be ample, at least until outflows for goods and services tax begin at the end of the week, dealers said. They expect the one-day call rate to be in the 4.60–5.30% range Tuesday. The one-day tri-party repo rate is expected to be in the 4.60–5.50?nd. The weighted average call rate is expected to be in the 5.15–5.25?nd and the tri-party repo rate is likely to be 5.05-5.30%, dealers said.

 

RBI AUCTION

--RBI to hold overnight variable rate reverse repo auction for INR 1.50 trillion 0930-1000 IST

--Twelve states to raise INR 202 billion via bond auction 1030-1130 IST

 

LIQUIDITY

Total net inflows of INR 48.40 billion. The calculation of flows does not take into account redemption of the Standing Deposit Facility and scheduled variable rate repo and variable rate reverse repo operations.

 

* Inflows

--INR 14.73 billion as coupon on state bonds

--INR 33.67 billion as coupon on 7.24%, 2055 bond

--INR 969.14 billion as reversal of overnight variable rate reverse repo

 

* Outflows

--Nil

 

End

 

US$1 = INR 95.60

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

 

Reported by Aaryan Khanna

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 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.