Informist, Thursday, Jul 21, 2022
By Shubham Rana
NEW DELHI – Overnight indexed swap rates came off the day's highs to end largely steady compared to Wednesday's levels as traders unwound their paid fixed rate positions, noting a fall in crude oil prices, dealers said.
The one-year overnight indexed swap rate settled at 6.33%, against 6.35% on Wednesday. The five-year swap rate ended at 6.58%, against 6.56% the previous day.
Brent crude oil for September delivery fell over 3% to $102 a barrel today, against $106.92 a bbl on Wednesday, because high US gasoline stockpiles stoked demand worries and returning energy supply from Libya and Russia eased fears of tight supply.
Traders avoided placing aggressive bets ahead of the European Central Bank's interest rate decision later today. "Market will look at commentary on inflation and growth from both the ECB today and Federal Reserve next week, more than the size of the rate hikes," a dealer at a private bank said.
Traders will take look at the interest rate decisions and commentary by central banks globally for cues on what the Reserve Bank of India will do next month at its Monetary Policy Committee meeting.
OIS rates are also being affected because of a difference in interest rate view among traders, dealers said. Some traders say the 1-year OIS is overpaid right now, while others are of the view that receiving fixed rates at current levels would be too risky.
"There is no long term view in OIS right now and there is also a difference in the overall view," a dealer at another private bank said. "No one wants to take positions which is leading to such volatility in rates."
OUTLOOK
On Friday, swap rates are seen steady amid lack of significant domestic cues on interest rates.
Any movement in US Treasury yields and crude oil prices may lend cues when the market opens. Traders will also keep an eye the European Central Bank's interest rate decision, due later today, along with commentary on growth and inflation.
The swap rate in the one-year segment is seen at 6.20-6.55%, and the five-year at 6.45-6.70%.
| At 1530 IST | Wednesday |
1-year OIS | 6.33% | 6.35% |
2-year OIS | 6.44% | 6.45% |
5-year OIS | 6.58% | 6.56% |
2-year MIFOR | 6.30-6.45% | 6.32-6.44% |
5-year MIFOR | 6.61-6.76% | 6.63-6.75% |
End
US$1 = 79.95 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Aditya Sakorkar
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