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Open market sales to mop liquidity: Jalan

The Reserve Bank of India chief said its open market operations to sell bonds, which started on Monday were to absorb excess funds from the money market and provide stability.

"The OMOs are to suck excess liquidity," RBI Governor Bimal Jalan told reporters, after a joint parliamentary committee briefing, when asked about whether the central bank was comfortable with falling yields.

"RBI's measures speak for itself," he added.

Indian bond prices were down on Monday morning with sentiment weighed down by the central bank's decision to conduct OMOs.

The central bank on Monday put two bonds from its own portfolio on sale -- 11.19 per cent 2005 bond for Rs 30 billion and 10.25 per cent 2021 bond for Rs 20 billion.

Ample supplies in the money market led to aggressive bidding at the auction of a 10-year cebtral government stock last Thursday where the central bank set a 6.85 per cent cut-off -- a record low -- and well below the 7.14 per cent in the secondary market.

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