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Informist, Tuesday, Aug. 11, 2026

 

MUMBAI - Government bond prices and overnight indexed swap rates are expected to be steady on Wednesday due to caution ahead of the release of India's CPI inflation data for July at 1600 IST. India's headline inflation is seen at 4.4% in July, unchanged from a month ago, according to the median of an Informist Poll of 12 economists. Traders expect a similar figure. Core inflation is seen at 3.9% in July, according to the poll, down from 4.1% in June.

 

While headline inflation is the Reserve Bank of India's Monetary Policy Committee's target, RBI Governor Sanjay Malhotra's focus on core inflation at last week's policy press conference will also make traders track the metric closely, dealers said. Traders will also await US CPI inflation for July, due after market hours Wednesday. US CPI inflation is seen rising 3.4% on year in July, according to the Wall Street Journal poll.

 

Intraday, bonds and swaps will take cues from developments in West Asia and their impact on crude oil prices. The markets will also take cues from movements in US Treasury yields, dealers said.

 

Traders will also gauge inflows through foreign currency non-resident (banks) deposits. Traders estimate inflows from these deposits to have hit about $45 billion as of this week. On Wednesday, the one-day interbank call money rate is seen opening below the RBI's repo rate of 5.25% amid ample surplus liquidity. 

 

GOVERNMENT BONDS

On Wednesday, gilt prices may take direction from developments in the war in West Asia and their impact on crude oil prices and US Treasury yields, dealers said. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 6.72% and 6.82% Wednesday, dealers said. Any significant movement in the rupee and swap rates will also lend cues, dealers said. 

 

Traders also await the release of CPI inflation data for July in India and in the US on Wednesday for cues on the interest rate trajectory in the two economies, dealers said. Traders may maintain caution ahead of inflation data, which may keep volumes low, dealers said. The 10-year benchmark 6.94%, 2036 bond ended at INR 101.12, or 6.7791%. 

 

OIS RATES

Wednesday, swap rates will track the overnight movement in crude oil prices and US Treasury yields, dealers said. However, trade activity is seen limited by caution ahead of inflation data. Some foreign banks are still seen receiving fixed rates due to inflows through foreign currency non-resident (banks) deposits, dealers said. The movement of the rupee and overnight borrowing rates will also lend cues. The one-year swap rate is seen in the range of 5.65-6.10% and the five-year at 6.12-6.40%. Tuesday, the one-year swap rate closed at 5.79% and the five-year swap rate settled at 6.29%.

 

CALL

On Wednesday, the one-day interbank call money rate is seen opening below the RBI's repo rate of 5.25% amid ample surplus liquidity. Liquidity is seen remaining comfortable due to inflows from foreign currency non-resident (banks) deposits, at least until outflows for goods and services tax begin in the latter half of the month, dealers said. Core systemic liquidity surplus could hit INR 9 trillion if inflows from FCNR(B) deposits continue to grow at a robust pace. Traders estimate inflows from these deposits to have hit about $45 billion as of this week. Dealers expect the one-day call rate to be around 4.60–5.25%. The one-day tri-party repo rate is expected to be in the 4.60–5.15?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 4.90-5.15%, dealers said. The one-day call money rate ended at 5.08% Tuesday. The weighted average call rate was 5.09%.

 

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 90 billion

--RBI to auction 182-day T-bills worth INR 80 billion

--RBI to auction 364-day T-bills worth INR 70 billion

--RBI to hold overnight variable rate reverse repo auction for INR 750 billion 0930-1000 IST

 

LIQUIDITY

Total net outflows of INR 125.66 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 27.34 billion as coupon on state bonds

--INR 391.41 billion as redemption of overnight variable rate reverse repo tender 

 

* Outflows

--INR 153.00 billion as payment for state bonds

 

End

 

US$1 = INR 95.44

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

 

Reported by Cassandra Carvalho 

Edited by Saji George Titus

 

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