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Thursday, September 29, 2022

India IRS Review: End largely unchanged on lack of significant cues

Informist, Friday, Jul 8, 2022

 

By Shubham Rana

 

NEW DELHI – The overnight indexed swap rates ended steady today amid muted volumes as traders stayed on the sidelines due to a lack of significant cues on interest rates.

 

The one-year overnight indexed swap rate settled at 6.31% as against 6.29% on Thursday, and the five-year swap rate fell to 6.73% from its previous close of 6.74%.

 

In the absence of firm domestic cues, swap rates have been tracking global factors for a few weeks now, dealers said. “Today the trade was lacklustre, there is nothing to even interpret,” a dealer at a private sector bank said.

 

US Treasury yields remained close to the levels they were at near the end of Indian trading hours on Thursday, which kept traders from placing large bets, dealers said.

 

The yield on the 10-year benchmark US Treasury note rose sharply on Thursday as investors waited for the US employment report for June due today, for cues about the strength of the economy as the US Federal Reserve hikes interest rates in a bid to curb inflation.

 

The yield on the 10-year benchmark US Treasury note remained below the psychologically-crucial 3.00% mark today.

 

“The US employment report will be crucial today as it may give more cues on what the Federal Reserve may look to do in its next meeting,” a dealer at a private sector bank said. “Volumes were low today as traders didn’t want to place large positions before this report comes.”

 

Dealers are of the view that the size of the rate hike by the Fed may influence the Reserve Bank of India’s decision too, in order to prevent large foreign exchange outflows.

 

The RBI announced a slew of measures on Wednesday to usher in foreign exchange inflows, which also raised concerns that the central bank may mull sharp rate hikes to keep pace with the US Fed and protect domestic asset prices, dealers said.

 

 

OUTLOOK

Swaps are not traded on Saturdays.

 

On Monday, swaps are seen steady due to a lack of significant domestic cues on interest rates.

 

Any sharp movement in crude oil prices and US Treasury yields might lend cues when the market opens.

 

The swap rate in the one-year segment is seen at 6.10-6.45%, and the five-year at 6.55-6.80%.

 

 

At 1530 IST

Thursday

1-year OIS

6.31%

6.29%

2-year OIS

6.56%

6.56%

5-year OIS

6.73%

6.74%

2-year MIFOR

6.10-6.24%6.11-6.25%

5-year MIFOR

6.50-6.64%6.51-6.65%

 

End

 

US$1 = 79.25 rupees

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

 

 

Edited by Michael Correya

 

 

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.

 

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© Informist Media Pvt. Ltd. 2022. All rights reserved.

Source: Cogencis

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