MUMBAI, Aug 11 (Reuters) - India's five-year overnight indexed swap (OIS) rate was sharply off its recent high on Thursday, as softer-than-expected U.S. inflation data raised bets that the Federal Reserve may not be very aggressive in terms of interest rate hikes. ** The five-year swap rate was at 6.20%, down 14 basis points from a high of 6.34% hit on Monday, while the one-year swap rate was trading at 6.11%, easing from Monday's high of 6.19%. ** "There is receiving interest from foreign banks in swaps, especially in the longer part of the curve, as Fed rate-hike bets have come down, and traders are anticipating a similar move locally," a trader with a private bank said. ** U.S. consumer prices rose 8.5% in July from a year earlier, down from 9.1% in the previous month and below 8.7% expected by economists in a Reuters poll. On a month-on-month basis, prices were unchanged. ** The odds of a 75-basis-point rate hike at the Fed's September meeting declined to 44% from over 70% prior to the data. The Fed had raised rates by 75 bps each at its June and July meetings.
** Traders in India now await local retail inflation data for July which is due on Friday. The reading is seen easing to 6.78% from 7.01% in June, according to a Reuters poll of economists. ** "Any larger-than-expected fall in India's inflation reading could see more receiving interest in five-year swaps, as traders will start cutting rate-hike expectations," a trader with a primary dealership said. (Reporting by Dharamraj Lalit Dhutia; Editing by Subhranshu Sahu)