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India IRS Review: Steady as mkt cautious ahead of MPC meet outcome

Informist, Wednesday, Mar 29, 2023


By Nishat Anjum


MUMBAI – Overnight indexed swap rates ended steady today as traders avoided placing aggressive bets ahead of the Monetary Policy Committee’s meeting next week, dealers said. The one-year swap rate settled at 6.79%, flat against Tuesday. The five-year swap rate ended at 6.25% against the previous day close of 6.27%.


“US Treasury yields have fallen below yesterday’s (Tuesday) close. There wasn’t much movement today,” a dealer at a primary dealership said. “If movement and volume, both were restricted. Before major events, no one wants to take a chance.” 


The meeting of the Monetary Policy Committee is scheduled for Apr 3, 5 and 6. Traders largely expect the rate-setting panel to go for a 25-basis-point rate hike. They also expect the repo rate to top at 6.75% after a final hike of 25 bps in April, dealers said. However, some dealers said that the number of people betting on a pause is slowly increasing.


Traders are also waiting for the government’s borrowing calendar for the new financial year starting Apr 1. Informist had reported on Mar 14, quoting a senior finance ministry official, that the government might continue with the practice of front-loading its borrowing in the first half of the year, where it may opt to conduct 55-58% of gross bond issuances in Apr-Sep. In absolute terms, this works out to 8.49-8.95 trln rupees. The government’s gross borrowing target for 2023-24 (Apr-Mar) is 15.43 trln rupees.


Traders avoided large bets on lack of significant domestic cues, dealers said. “There is hardly any volume in the market. In such cases, even a few bets decide the movement,” a dealer at a private bank said. “Other than that, the market is also divided about the hike or a pause in the upcoming policy review meeting.”


For the larger part of the day, the swap rates tracked the movement in US Treasury yields, dealers said. In early trade, traders paid fixed rates tracking a rise in US Treasury yields, dealers said. Yield on the benchmark 10-year US Treasury note rose to 3.58% compared with 3.56% at the end of Indian market close on Tuesday.


US Treasury yields rose as fear of a crisis in the banking sector eased after the announcement of the acquisition of Silicon Valley Bank by First Citizens Bank. Additionally, Federal Reserve Governor Michael Barr on Monday said Silicon Valley Bank’s failure was a “textbook case of mismanagement”, and pointed out that the central bank would investigate its processes around risk testing and assessment. 



Indian Money Markets are closed on Thursday on account of Ram Navami.


On Friday, swap rates are seen steady due to lack of significant cues in the domestic market, dealers said.


Traders may also watch out for any sharp movement in US Treasury yields and crude oil prices at open.


The swap rate in the one-year segment is seen at 6.70-6.85%, and the five-year at 6.20-6.35%.



At 1700 IST


1-year OIS


2-year OIS


5-year OIS


2-year MIFOR


5-year MIFOR





Edited by Akul Nishant Akhoury


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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Source: Cogencis

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