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Bond yields jumped on Monday morning after the Reserve Bank of India late on Friday surprised investors with the announcement of an open market sale of bonds for Rs 10,000 crore ($1.58 billion), to be conducted on July 14.
Traders attributed the announcement to a likely cash surplus in the system, due to the RBI's forex intervention and government spending.
The benchmark 10-year bond yield was up 10 basis points at 7.90% by 0345 GMT, while the most traded 8.40% 2024 bond yield was 11 basis points higher at 8.07%.
The rise in yields, if sustained, would be the biggest single-day rise since June 2. Traders said the expectation of a string of open market sales of bonds going ahead was unsettling investors.
($1 = 63.4650 rupees)
