Currency Exchange Rates Surge As Traders See RBI Rolling Back Monetary Stimulus

World traders are betting that the central bank will have to raise interest rates sooner than expected.

New Delhi: Swap rates increased in India, indicating that, despite their assurances, traders expect the central bank to lift monetary stimulus sooner than expected.

The 5-year swap of the Land Overnight Index, a tool for forecasting interest rates, rose 31 basis points to 5.64% in October. We are poised to deliver the highest monthly earnings since February, when the government announced that the economy had emerged from recession before the delta options broke.

Global traders are betting that central banks will have to raise interest rates sooner than expected as inflation picks up in the era of the pandemic. Price pressures in India have eased in recent months, but economists believe it will pick up again largely due to rising energy prices around the world, which could impact the Reserve Bank of India’s policy. There’s sex.

Vijay Kumar Sharma, Senior Executive Vice President of PNB Gilts Ltd, said:
Elsewhere, inflation rose faster than expected, and Australia reported a spike on Wednesday that led to bond sales. Over the past week, price pressures in New Zealand sparked a similar reaction.

According to a release from DBS Bank Ltd, CPI is expected to open stores in India from October to November but will return to 6% in the following quarter. It is said that the more expensive import is the currency.

Due to rising swap rates in India, the 5-year bond yield spread is near zero by almost 80 basis points at the start of the year. The one-year land swap index also rose 29 basis points this month.

Surprise cone

Nomura Holdings estimates India imports about 85% of its oil demand, and rising energy costs could add 100 basis points to headline inflation over the next six months.

At a policy review meeting in October, RBI Governor Shaktikanta Das said he would surprise traders and suspend the national debt-buying program. However, it cautioned against talking about rate hikes and stressed the continuation of easing measures.

Nagaraj Kurkarni, senior Asian interest rate strategist at Standard Chartered Bank, said swaps could raise overnight rates by about 150 basis points over the next year due to changing liquidity conditions and interest rates. growth. The lender expects a 100 basis point increase.

The fixed rate per night is 3.48% on Tuesdays. Citigroup Inc. also closed foreign transactions with a higher OIS curve, fearing that inflation would continue to rise in the long run.

“Global price revisions in anticipation of rising energy prices and political normalization have erased India’s swap curve,” Citigroup analyst Gauraf Garg said in a statement to customers. determined. “While the PC RBIM’s growth focus remains clear, market participants are getting random short-term recipients as global inflation concerns persist and some central banks are reluctant to give in to price pressures. Let him go with me.