NEW! Australian Interest Rate Product
Interest rates are rarely out of the news these days with 4 rate rises in the past 18 months. IG Markets is excited to offer a new way of trading future movements in Australian interest rates.
The 30-Day Interbank Cash Rate Future is based on a monthly average of the RBA's overnight cash rate. This product allows you to trade on the single most influential interest rate governing your daily cash exposures. You can now hedge your interest rate obligations against further rises in the overnight cash rate, or alternatively take a view on the RBA's future policy decisions.
The price of the 30-Day Interbank Rate is equal to 100 minus the yield, with one contract being $25 per point. The Cash Settlement Price is equal to 100 minus the Cash Settlement Rate (the average overnight cash rate for the month, as published by the RBA).
For example, if the price of the March 08 Future is currently 9308/9312 the market expects the average overnight cash rate for the month of March to be 6.9% pa (currently 6.75%). If you believe the RBA is unlikely to raise rates between now and the end of March 08 you can buy 1 contract of the future at 9312. If there is no rate rise during this period the contract will settle at 9325 (100 - 6.75), resulting in a profit of $325 ($25 x 13).
For further details or for a more detailed explanation, please do not hesitate to call (03) 9860 1799 or free call 1800 601 799.
The above comments do not constitute an investment advice and IG Markets accepts no responsibility for any use that may be made of them.