India's one-year overnight indexed swap (OIS) rate settled around its highest level in over two months on Friday because of tight liquidity and lack of clarity over the timing of an interest rate cut by the Reserve Bank of India. The one-year swap rate closed up 6 basis points at 8.13 percent, a level last seen on November 16.
The benchmark five-year swap rate was up 2 basis points at 7.32 percent. With core inflation still stubbornly high, the RBI, as expected, left its policy repo rate unchanged at 8.50 percent for the second consecutive review on Tuesday. It would be difficult to predict the timing, pace and magnitude of any interest rate cuts, RBI Governor Duvvuri Subbarao said after the policy review.
Banks borrowed 1.59 trillion rupees ($31.99 billion) from the central bank's repo window on Friday, slightly higher than 1.45 trillion rupees on Wednesday, indicating the extent of cash tightness in the banking system. Cash deficit, as indicated by the repo bids at the RBI's liquidity adjustment facility, has remained above 1 trillion rupees on most days since mid-December, significantly higher than the RBI's comfort zone of 600 billion rupees. The total traded volume was 72.24 billion rupees, data by the Clearing Corp of India showed.
Comments
Comments are closed for this article.