Indian Bonds Fall as RBI to Drain Cash in First Move This Year

India’s sovereign bond yields rose after the central bank announced its first step this year to drain cash from the banking system, as it seeks to push up overnight borrowing costs to its policy rate.

The 10-year benchmark yield rose as much 4 basis points to 7% after the Reserve Bank of India announced plans to withdraw liquidity of up to 2 trillion rupees ($21.6 billion) via a seven-day variable rate reverse repo auction — the first since December. Surplus cash with banks was at 4.3 trillion rupees as of Thursday, according to a Bloomberg Economics gauge.