Swap rates are rising in India in a sign that traders expect the central bank to roll back monetary stimulus quicker than expected despite its reassurances.
The five-year onshore overnight indexed swap, a tool to trade rate expectations, has advanced 31 basis points in October to 5.64%. It’s poised for the biggest monthly gain since February when the government said the economy had exited a recession before a Delta variant outbreak.
Traders globally are betting that central banks will have to hike rates faster than projected as pandemic-era inflation become entrenched. While price pressures in India eased in the past