India's central bank unexpectedly announced it would buy 100 billion rupees ($1.50 billion) of government bonds via open market operation, after failing to sell all the debt it had offered to bidders earlier on Friday. It was the third straight week when the Reserve Bank of India couldn't sell everything on offer, leading to a spike in bond yields.
The 10-year government bond yield rose to 7.75 percent from 7.74 percent before the auction result was announced. It had ended at 7.73 percent on Thursday. The bond-purchase announcement is expected to soothe the market. The RBI will buy 8.12 percent 2020 bond, 6.84 percent 2022 bond, 7.72 percent 2025 bond, 6.79 percent 2027 bond, and 8.24 percent 2033 bond via open market operation on May 17, it said in a notification on Friday.