Indian bonds fell after the Reserve Bank of India said it will sell sovereign
bonds to withdraw 1 trillion rupees (about $10.5bn) of cash from lenders — its
most aggressive step to absorb excess system liquidity and guard against
inflation. The move added to supply pressure in a year already strained by
record government borrowing; 5‑year yields rose as much as 13bps and the 10‑year
climbed 6bps. Higher oil prices are amplifying inflation risk and have increased
the likelihood of an RBI rate hike next month. Federal borrowing over the next
six months is near 8 trillion rupees, coinciding with a heavy period of state
bond issuance. Indian debt joined a global selloff driven by inflation and
supply concerns. Markets were closed Monday for a public holiday.
