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Interest Rate Derivatives


An interest rate derivative is an instrument where the underlying asset is the right to pay or receive an (usually notional) amount of money at a given interest rate. In other words, interest rate derivatives are financial instruments based on an underlying financial security whose value is affected by interes rate changes. These products are used by a variety of participants in order to hedge their exposures against adverse interest rate movements. Such instruments are also used for speculation purposes, which broadly serve as an indicator for interest rate expectations. In India, the interest rate derivatives segment is at a growing stage. As of now, the interest rate derivatives permitted by regulatory guidelines in India include

 

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Real gross domestic product for Q3FY21 noted a year on year growth of 0.4%, showing signs of improvement over the previous quarter’s contraction of -7.3%.
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In April 2021
In April 2021 Monetary Policy meeting, the MPC unanimously decided to maintain status quo on policy rates. The key policy rates stand unchanged: Repo rate at 4.00%, Reverse Repo rate at 3.35%, Marginal Standing Facility and Bank rate at 4.25%.
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Consumer Price
The Consumer Price Index (Combined) inflation for March 2021 printed at 5.52% as compared to a reading of 5.03% in the previous month. Average CPI inflation for FY21 stood at 6.18% as compared to 4.76% in FY20.
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WPI Infation
Headline WPI inflation for March 2021 printed at 7.39%, substantially higher than 4.17% recorded in February 2021, largely due to inflationary pressures emanating from manufactured products and fuel index.
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IIP growth for February 2021
IIP growth for February 2021 printed lower at -3.6% as against the revised estimate of -0.8% recorded in January 2021, on a year on year basis.
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