Indian Government Bonds May Fall on Speculation Central Bank to Drain Cash

(Bloomberg) -- India's government bonds may drop on
concern the central bank will remove spare cash from the banking
system to curb inflation, leaving investors with less money to
buy debt.

The Reserve Bank of India may sell bonds or ask banks to
increase their cash reserves in coming weeks to absorb excess
funds that may stoke price gains, said Rajesh Babu, a fixed-
income trader at state-owned Andhra Bank Ltd. in Mumbai. The
central bank sells securities under a so-called market
stabilization plan to absorb excess money from the financial
system.


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