MUMBAI, Aug 11 (Reuters) - India's five-year overnight
indexed swap (OIS) rate was sharply off its recent high on
Thursday, as softer-than-expected U.S. inflation data raised
bets that the Federal Reserve may not be very aggressive in
terms of interest rate hikes.
** The five-year swap rate was at 6.20%, down 14
basis points from a high of 6.34% hit on Monday, while the
one-year swap rate was trading at 6.11%, easing
from Monday's high of 6.19%.
** "There is receiving interest from foreign banks in swaps,
especially in the longer part of the curve, as Fed rate-hike
bets have come down, and traders are anticipating a similar move
locally," a trader with a private bank said.
** U.S. consumer prices rose 8.5% in July from a
year earlier, down from 9.1% in the previous month and below
8.7% expected by economists in a Reuters poll. On a
month-on-month basis, prices were unchanged.
** The odds of a 75-basis-point rate hike at the Fed's September
meeting declined to 44% from over 70% prior to the data. The Fed
had raised rates by 75 bps each at its June and July meetings.
** Traders in India now await local retail inflation data
for July which is due on Friday. The reading is
seen easing to 6.78% from 7.01% in June, according to a Reuters
poll of economists.
** "Any larger-than-expected fall in India's inflation reading
could see more receiving interest in five-year swaps, as traders
will start cutting rate-hike expectations," a trader with a
primary dealership said.
(Reporting by Dharamraj Lalit Dhutia; Editing by Subhranshu