OIS rates spike in Oct on geopolitical tension, spread with G-sec narrows

OIS rates are a crucial indicator reflecting expectations for interest rate changes, and they are the principal tool for hedging interest rate risk in India

Overnight index swap (OIS) rates have been soaring in October due to the rise in US Treasury yields and on the expectations of delayed rate cut by the Reserve Bank of India’s rate setting panel, said dealers.

OIS rates are a crucial indicator reflecting expectations for interest rate changes, and it is the principal tool for hedging interest rate risk in India.

The spread between the 5-year OIS rate and the yield on the benchmark 10-year government bond has narrowed by 8 basis points in the same period.

The 5-year OIS rate has risen by 10 basis