RBI could be facing another standoff with traders over new bond sale

Central bank seeks to keep the government's borrowing costs low, while investors are demanding higher yields.

The Reserve Bank of India is set for another standoff with traders as it auctions a new benchmark 10-year bond.
 

While the current benchmark coupon was set at 5.85%, five traders surveyed by Bloomberg expects the central bank to sell the new bond at a cutoff yield of 6.1% at Friday’s auction.

The RBI has been locked in a tussle with the bond market as it seeks to keep the government’s borrowing costs low, while investors are demanding higher yields because of rising inflation and supply concerns. Setting a lower coupon for the new 10-year bond may lead to a