Rupee gains, bonds fall on RBI cash-draining steps

The rupee saw a modest gain early on Monday while government bonds fell on Monday after the Reserve Bank of India (RBI) last week announced additional steps to drain cash in a bid to prop up a currency trading at record lows.

The RBI will auction Rs 22000 crore of government cash management bills every week, it said in a statement, without specifying for how many weeks the sales would last.

The first sale - a tranche of Rs 11000 crore - takes place later in the day, with another Rs 11000 crore scheduled for Tuesday.

The partially convertible rupee rose to as much as 60.45 per dollar in early deals compared to its close of 60.88/89 on Thursday. Financial markets were closed on Friday for a local holiday.

The benchmark 10-year bond yield rose 11 basis points to 8.23 percent.

($1 = Rs 60.8650)