More Stories

Informist, Thursday, Sept. 24, 2026

 

By Janwee Prajapati

 

MUMBAI – Overnight indexed swap rates ended higher Thursday tracking a sharp rise in Brent crude oil prices and US Treasury yields, dealers said. Traders remained cautious ahead of the Reserve Bank of India's Monetary Policy Committee meeting next week, dealers said. Moreover, the recent escalation in war in West Asia also spooked traders as Brent crude oil futures climbed back to over $105 per barrel, they said. Given the sharp overnight rise in Brent crude oil prices and US Treasury yields, the five-year and one-year swap rates opened higher Thursday.

 

The one-year swap rate ended at 6.17%, the highest since May 22, up from 6.10% on Wednesday, while the five-year swap closed at 6.64% against 6.55% in the previous session. The one-year swap touched a day's low of 6.13?fore rising to 6.17%, tracking the intraday climb in oil prices, dealers said. Traders expect the one-year swap yield to rise to 6.20% if Brent crude continues to move up and nears $120 per barrel. However, they expect the rate to remain below the psychologically crucial 6.25% mark.  

 

Brent crude oil futures for delivery in November rose to $104.90 per barrel at 1700 IST, down from the day's high of $106.40 per barrel but up from $100.19 per barrel at the end of Indian trading hours Wednesday. The yield on the 10-year benchmark US Treasury note was at 5.13%, down from near-two-decade high of 5.15% hit intraday, but up from 4.98% at the end of Indian trading hours Wednesday. 

 

Oil prices climbed back above $100 per barrel after markets parsed competing speeches from Iran and the US at the UN General Assembly. Iran said it remained open to diplomacy to end the US-Iran war, although the two sides remained far apart on how to reach a resolution. The comments came after Iran's president told the UN General Assembly that Tehran would never surrender to US pressure.

 

"The OIS (swap rates) was better behaved than the G-sec market today (Thursday)," a dealer at a private sector bank said. "People are now afraid because of the (US-Iran) war... we might see crude oil going above $110 per barrel. (Traders are cautious because) We also have MPC (Monetary Policy Committee meet) next week. Most traders expect the Reserve Bank of India's Monetary Policy Committee to hike the repo rate by 25 basis points each in October and December, with the one-year OIS pricing in about three hikes of 25 bps each within 12 months.

 

The total notional trading volume on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 562.55 billion on Thursday, up from INR 458.30 billion on Wednesday. Some traders squared their positions ahead of the RBI's MPC meeting decision next week. Domestic and offshore players paid fixed rates as they expected the rates to rise given the expectation of an increase in crude oil prices with no potential US-Iran peace deal in sight, dealers said.

 

"Volumes are decent today (Thursday)... some domestic players who were receiving earlier squared up their positions," a dealer at a primary dealership said. "Domestic players had received (fixed rates) near 6.53-6.54% level... We opened a gap-up today (Thursday) so both domestic and offshore players were paying (fixed rates)."

 

Traders hedged their bond positions in swaps and are now awaiting the Centre's borrowing calendar for Oct-Mar for further cues, which are expected Friday. Most market participants expect supply of shorter-tenure bonds to rise compared to Apr–Sept, which could push up swaps of similar maturities, dealers said.

 

OUTLOOK

On Friday, swap rates are likely to continue tracking overnight movements in crude oil prices and US Treasury yields, dealers said. 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 will focus on comments by RBI Governor Sanjay Malhotra, dealers said. 

 

Traders also expect the RBI 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. Some expect more open market operation sales of INR 500 billion or INR 1 trillion. The Centre's borrowing plan for Oct-Mar is also awaited, with the proportion of bond maturities in the plan likely to be an indication of the rate hike cycle and of how the RBI prefers the yield curve to move. Traders expect the announcement on Friday. Traders will also assess the outcome of meetings the central bank is conducting this week on feedback from market participants ahead of the policy decision. The one-year swap rate is seen in the range of 5.95–6.25% and the five-year at 6.40–6.70%.

 

	At 1700 IST	WEDNESDAY
1-year OIS	6.17%	6.10%
2-year OIS	6.36%	6.30%
5-year OIS	6.64%	6.55%
2-year MIFOR	7.82%	7.63%
5-year MIFOR	7.84%	7.71%

 

End

 

US$1 = INR 95.96

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

 

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 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.