HALISTER1: Continue Receiving India 1-Year Offshore Swaps, HSBC Says

Continue Receiving India 1-Year Offshore Swaps, HSBC Says

(Bloomberg) -- Latest RBI liquidity measures are pushing money market rates lower as overnight fixing drops towards the repo policy rate, Himanshu Malik, strategist at HSBC, says in note yesterday.
  • RBI’s emphasis on liquidity easing is likely to continue, which should lead to a steeper NDOIS curve
  • RBI has limited scope for further rate cuts given impact of govt employees’ pay hike on inflation and its target to bring headline inflation below 5% by March 2017
  • RBI may have to buy 1t-1.5t rupees of govt bonds in fiscal 2017
    • Reason for just one OMO purchase in April is largely due to build-up in FX reserves as maturing non-resident deposits could add significant liquidity near term
  • 1-year NDOIS down 1 bp to 6.60%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Himanshu Malik (HSBC Securities Asia Ltd)

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