India swap rates end higher on cbank chief's comments

MUMBAI, Nov 27 (Reuters) - Indian swap rates were steady in volatile trading on Friday on hawkish comments by the central bank chief, which offset concerns about the health of the global financial system that surfaced due to Dubai's debt issues.

The swaps rebounded following bond yields that came off 2-month lows later in the day, after the central bank chief said that there was no benign policy option and that inflationary pressures were building up. [ID:nBMA006493]

Swaps had fallen the morning to fresh 2-1/2-month lows, as some investors continued to cut their earlier paid positions, after risk aversion pushed bond prices higher and equities down across Asia.

The benchmark five-year swap INRAMONMI5Y= closed at 6.41/45 percent, a tad above its previous close of 6.40/44. It had fallen to 6.36 percent earlier in the day, a level last tested on Sept. 7, according to Thomson Reuters data.

Dubai said on Wednesday it wanted creditors of Dubai World and property group Nakheel to agree a debt standstill as it restructures Dubai World, the conglomerate that spearheaded the emirate's breakneck growth. [ID:nGEE5AO2L1]

"It was a volatile day. People showed interest to receive in the morning but at dips, soon emerged paying interests," said a dealer at a brokerage.

"The five-year rate was strongly supported around 6.40 percent levels and on the higher side, 7 percent can be a key resistance."

A trader at a foreign bank said people will now look for more supportive economic data before fully accepting the central bank's hawkish tone.

Government data showed on Thursday that the food articles index rose an annual 15.6 percent as at Nov. 14, up from the previous week's 14.6 percent rise.