India OIS rates off day's highs on lower cut-off yields

MUMBAI, Nov 6 - Indian five-year swap rate eased off its intra-day high Friday afternoon after results of a bond auction held earlier in the day showed the papers were sold at better-than-expected prices.

Traders said the overnight indexed swap rates opened lower as investors continued the previous session's trend of cutting back paid positions, but inched higher later in thin trading, tracking higher bond yields.

At 4:15 p.m, the benchmark five-year rate <INRAMONMI5Y=> was at 6.61/65 percent, off an intra-day high of 6.68 percent and steady from its previous close.

"Lower-than-expected cut-off yields set at the auction pushed the rate lower," said a trader at a state-run bank.

India sold three bonds for a total of 90 billion rupees on Friday and the cut-off yields set by the central bank for all three papers were below the forecasts of a Reuters poll held during auction hours. [ID:nMBI005857]

Some traders expect the five-year swap rate to fall as low as 6.50 percent in the coming weeks as foreign banks may continue to offload their previous paid positions before year-end holidays.

Economic data due could impact such a strategy, they said.

As for the next week's start, U.S. monthly jobs data due out at 1330 GMT, could be influential, traders said.

Total volume in swaps was at 11.25 billion rupees, compared with 67.50 billion rupees at close on Thursday at the central bank's reporting platform.