India bonds slump after RBI announces open market bond sale

MUMBAI (Reuters) - Indian government bonds yields rose sharply on Monday after the central bank announced an open market sale of debt to mop up excess liquidity that filled the country's banking sector following last year's demonetisation push. The announcement from the Reserve Bank of India late on Friday on a 100 billion rupees ($1.55 billion) sale of government bonds surprised traders, who had expected it to happen in August near the time when the central bank 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 some of the excess cash, a method that was seen as less disruptive than removing liquidity through regular OMOs. Financial Astrology Tips

Traders said the open market sale appeared intended to help offset bond redemptions of 526.20 billion rupees due July 9, with another 303 billion rupees in August, which would have added liquidity to the financial system. "It looks like they are timing it with bond redemptions," said one senior dealer at a foreign bank, noting the overall impact of the open market bond operation would likely end up being broadly neutral on liquidity. The new 10-year bond yield jumped as much as 11 basis points to 6.62 percent in early trade, its highest level since June 7, from its close of 6.51 percent. It was trading at 6.59 percent at 0600 GMT. Astrology and Numerology Trading Tips