Indian rate swaps up as inflation, oil prices weigh

Fri, May 16 07:46 PM

MUMBAI (Reuters) - Indian overnight indexed swaps rose on Friday, after official data showed inflation headed towards 8 percent in early May and global oil prices traded at record levels.

The five-year swap rate ended at 7.52/7.54 percent, up from the previous close of 7.43/45 percent.

"Inflation has raised worries of a rate hike," a trader with a foreign bank said.

Data on Friday showed annual inflation at 7.83 percent on May 3, a 3-½ year high, and the provisional rate for March 8 was revised up to 7.78 percent from 5.92 percent.

Oil, India's biggest import, hit a fresh record highs above $127 a barrel on Friday, raising the risk of inflation inching up further in the coming weeks.

India's central bank has kept its short-term lending rate steady at 7.75 percent since March 2007.

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