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Mumbai: Indian government bonds yields rose sharply on Monday after the central bank announced an open market sale of debt to remove some of the excess cash left at lenders because of the government’s removal of a big part of currency bills last year.

The Reserve Bank of India (RBI) said late on Friday it will sell Rs100 billion ($1.55 billion) of government bonds on Thursday.

The new 10-year bond jumped as much as 11 basis points to 6.62% in early trade, its highest level since 7 June, from its close of 6.51%.

Traders said the timing of the open market sale was a surprise as markets had expected it to happen in August to coincide with the time when the RBI must pay a hefty dividend to the government.

The RBI has so far resorted to selling short-end securities through a special scheme to drain out some of the excess cash, a method that was seen as less disruptive. Reuters

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