More Stories

Informist, Tuesday, Aug. 25, 2026

 

NEW DELHI – Government bond prices and overnight indexed swap rates will take cues from developments between the US and Iran and consequent movement in crude oil prices and US Treasury yields at the open on Thursday, dealers said. Financial markets administered by the Reserve Bank of India will remain shut Wednesday for Id-e-Milad.

 

Dealers are also looking ahead to US Federal Reserve Chair Kevin Warsh's remarks later this week at his first Jackson Hole Economic Policy Symposium as head of the US central bank. Both instruments remain sensitive to overseas triggers at a time of few interest rate cues domestically. Traders are also tracking how banks will deploy incoming foreign currency non-resident (banks) deposits before the RBI's special schemes on their mobilisation ends on Monday, dealers said.

 

The one-day interbank call money rate is expected to open near the RBI's repo rate of 5.25% due to early demand for funds from primary dealers, dealers said. Dealers expect the one-day call rate at 4.60–5.30% Thursday.

 

GOVERNMENT BONDS

On Thursday, gilts will track developments in the war in West Asia and near-month Brent crude oil futures, dealers said. Gilts will also track movement of US Treasury yields, which are pricing in heavy supply along with inflation fears, dealers said.

 

A rise in yields could be tempered by banks deploying foreign inflows into gilts, dealers said, especially in short-term bonds this week, with expectations of some purchases from foreign banks. Once the RBI's swap window for FCNR(B) deposits closes, however, the bond yield curve is seen flattening as the focus shifts to the likelihood of rate hikes. A fall in yields would be limited by profit sales by banks which picked up the 10-year benchmark 6.94%, 2036 gilt as it traded between 6.85% and 6.90%. On Tuesday, the bond ended at INR 100.63 or 6.8488%.

 

Traders also look ahead to India's GDP data for the June quarter, set for release at 1600 IST Monday. According to the median of an Informist Poll of 14 economists, India's economic growth is expected to moderate to a one-year low of 7.2% in the June quarter. Expectations of rate hikes in 2026 are seen increasing after the RBI's rate-setting panel focused on the potential for the same at its meeting earlier in the month.

 

Any significant movement in the rupee and swap rates will also lend cues, they said. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 6.82% and 6.90%, dealers said. 

 

OIS RATES

Thursday, swaps will track any signs of a peace deal between the US and Iran, and movement in crude oil prices, dealers said. US Treasury yields will also provide direction ahead of the annual Jackson Hole Economic Policy Symposium, where US Federal Reserve Chair Kevin Warsh is scheduled to speak.

 

If Brent crude oil prices sustain Tuesday's fall below $90 per barrel, traders will begin to price out imminent rate hikes in both the US and India, even though 'hawkish' commentary from US and Indian central bank officials recently has kept up rate hike bets. The movement of the rupee and overnight borrowing rates will also lend cues.

 

Thursday, the one-year swap rate is seen in the range of 5.70-6.00% and the five-year at 6.20-6.52%. Tuesday, the one-year swap rate ended at 6.86% while the five-year swap rate closed at 6.35%.

 

CALL

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

 

The RBI will conduct an overnight VRRR auction for INR 2.00 trillion at 0930-1000 IST Thursday. The auction may be half-subscribed as banks have cash stuck in subscriptions for equity initial public offerings.

 

Dealers expect the one-day call rate at 4.60–5.30% Thursday. The tri-party repo rate is expected to be in the 4.50–5.25?nd. The weighted average call rate is expected to be in the 5.05–5.20?nd, and the tri-party repo rate is likely to be 4.90-5.20%, dealers said.

 

RBI AUCTION

--RBI to hold overnight variable rate reverse repo auction for INR 2.00 trillion 0930-1000 IST

--RBI to auction 91-day T-bills worth INR 90 billion at 1030-1130 IST

--RBI to auction 182-day T-bills worth INR 80 billion at 1030-1130 IST

--RBI to auction 364-day T-bills worth INR 70 billion at 1030-1130 IST

 

LIQUIDITY

Total net outflows of INR 20.80 billion. The calculation does not take into account redemption of the Standing Deposit Facility and scheduled variable rate repo and variable rate reverse repo operations.

 

* Inflows

--INR 45.20 billion as coupon on state bonds

--INR 985.16 billion as reversal of two-day variable rate reverse repo Thursday

--INR 135.00 billion as redemption of 182-day T-bills Thursday

 

* Outflows

--INR 201.00 billion as payment for state bond auction

 

End

 

US$1 = INR 95.41

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

 

Reported by Aaryan Khanna

Edited by Deepshikha Bhardwaj

 

 

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.