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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

 

Latest News


In its first Bi-Monthly Monetary Policy for FY18, the MPC-panel maintained its pause on policy rates, whilst reiterating its neutral stance.
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The panel forecasts mild upside risks to its inflation projections, while GVA growth is expected to remain healthy at 7.4% for FY18.
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India’s consumer price-based inflation dropped to new record low of 2.99% in April on the back of decline in prices of food articles including pulses and vegetables.
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India’s WPI based on the revised 2011-12 series edged lower to 3.85% in April as manufactured goods and food articles indicated cooling of prices.
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Further fine-tuning the existing liquidity framework, RBI narrowed the LAF corridor to +/- 50 bps vis a vis the earlier +/- 100 bps.
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Consequently, the policy rates are as follows: 1. Repo rate: 6.25%, 2. Reverse repo: 6% , 3. MSF at 6.50%.
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India’s Industrial Production in March under the revised base year of 2011-12 slipped 2.7% as against 5.5% in Feb owing to weak performance in the manufacturing sector.
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