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Informist, Thursday, Sept. 17, 2026

 

By Cassandra Carvalho

 

MUMBAI – Overnight indexed swap rates ended lower Thursday, with a fall in Brent crude oil prices near the end of trade aiding the slide, dealers said. Some non-banking financial companies received fixed-rate contracts in the five-year swap, dealers said. Swaps had opened higher, tracking an overnight rise in US Treasury yields after the US Federal Open Market Committee unanimously hiked its interest rate by 25 basis points late Wednesday. The decision was in line with expectations and priced in, dealers said. 

 

The one-year swap rate ended at 6.04%, down from 6.07% Wednesday. The five-year swap rate ended at 6.58%, down from 6.62% Wednesday. Total notional trading volume on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 533.50 billion Thursday, rising from INR 276.25 billion Wednesday. Brent crude oil futures for delivery in November fell to $103.29 per barrel at 1700 IST from $105.69 at 0900 IST, after wavering intraday, but down from $107.07 per barrel at the end of swap market hours Wednesday. Oil prices fell on reports that Saudi Arabia is supplying crude through Oman, while US President Donald Trump said he hopes an end to the war in West Asia is near. "Morning we opened higher, but that (FOMC) is priced in," a dealer at a private-sector bank said. "Most of the day crude came off, so there was receiving. Let's see now on 28th October whether he (FOMC) hikes again." The notional traded volume in the six-month contract was the highest after that of the five-year swap, at INR 150.50 billion. Pricing of rate hikes in India in swaps, however, was little changed Thursday. 

 

While focus was on oil prices intraday, traders digested the outcome of the US FOMC meeting late Wednesday, as the committee hiked the fed funds rate by 25 basis points to 3.75-4.00%, with officials seeing the target rate at 4.00-4.25% by end of this calendar year. However, the decision was widely expected, and cemented bets of a 25-bps hike in the repo rate by the Reserve Bank of India's Monetary Policy Committee at its upcoming meeting in October, dealers said. "Now swaps are not going to rise much. Only if there's something of shock value, if oil moves (higher) or if he (MPC) hikes by 50 bps in October, then we'll see a big move (rise)," a dealer at another private-sector bank said.   

 

OUTLOOK

Friday, swap rates are seen tracking the overnight movement of crude oil prices, with some traders expecting these prices to form a downtrend in the near term. Swaps will also track movement in US Treasury yields, with the US yield curve flattening after the FOMC hiked the fed funds target rate for the first time since 2023. Thursday, the spread between the one-year and five-year swap rates was little changed from Wednesday.

 

As the US Fed began its rate hike cycle, the RBI's rate-setting panel is seen following suit with a 25-bps repo rate hike in October, dealers said. Traders also expect the central bank to introduce more measures to drain systemic liquidity, beyond the government bond sales it is conducting this month and variable rate reverse repo operations, they said. The one-year swap rate is seen in the range of 5.95-6.15% and the five-year at 6.40-6.70%.

 

	At 1700 IST	WEDNESDAY
1-year OIS	6.04%	6.07%
2-year OIS	6.25%	6.30%
5-year OIS	6.58%	6.62%
2-year MIFOR	7.69%	7.63%
5-year MIFOR	7.78%	7.72%

 

End

 

US$1 = INR 95.93

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

 

Edited by Saji George Titus

 

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