Indian Swaps Complete Weekly Advance as RBI Refrains From Easing

India’s interest-rate swaps snapped three weeks of declines after the central bank refrained from easing monetary policy.

The Reserve Bank of India kept the cash-reserve ratio unchanged at 4.25 percent on Dec. 18 and held the repurchase rate at 8 percent. Twenty-one of 24 analysts surveyed by Bloomberg forecast the central bank would reduce the reserve ratio. Lenders borrowed 1.7 trillion rupees ($31 billion) from the RBI’s overnight repurchase window yesterday, the most since March, reflecting a shortage of cash in the banking system.

“Swaps have risen as the reserve ratio has been kept steady, although liquidity is tight,” said Debendra Kumar Dash, a fixed-income trader at Development Credit Bank Ltd. in Mumbai. “The lack of a rate cut was also disappointing.”

The fixed payment to lock in one-year borrowing costs rose five basis points this week to 7.68 percent in Mumbai, according to data compiled by Bloomberg. The rate fell seven basis points this year and five basis points today as the central bank purchased 79 billion rupees of notes.

The yield on the benchmark 8.15 percent government bonds due June 2022 was little changed from Dec. 14 at 8.14 percent. The rate fell one basis point, or 0.01 percentage point, today.

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