Mumbai: The central bank's first open market operation (OMO) sale of the year saw a stronger-than-expected response, with market participants placing bids worth ₹66,590 crore against the notified amount of ₹50,000 crore. The Reserve Bank of India (RBI) accepted bonds at yields higher than prevailing market levels, seeking to suck out excess liquidity.

Higher yields suggest a premium demanded from the investors. 68% GS 2031 paper garnered bids of ₹7,970 crore.

RBI's OMO sale exceeds expectations, absorbing excess liquidity with higher bond yieldsThe Reserve Bank of India's open market operation sale received robust investor interest. This operation aimed to absorb surplus liquidity from the banking system.

The central bank accepted bonds at yields higher than prevailing market rates. This move precedes a significant weekly bond auction scheduled for Friday.

Further liquidity absorption measures are planned for the coming week." The yields were slightly higher than prevailing market levels and expectations, but the OMO was well subscribed.

Since the sale was fully subscribed, it did not lead to any significant negative reaction in yields," said Alok Singh, head of treasury at CSB Bank. Read more: Paytm karo, back in vogue again: Can the stock reclaim IPO price after 5 years and 480% rally?

The RBI is conducting OMOs to absorb surplus system liquidity and align the weighted average call rate (WACR) with the policy rate. Selling securities in the OMO is one of the measures the central bank uses to drain excess liquidity in the banking system.

37 lakh crore on September 16, while the next OMO sale of ₹25,000 crore will take place on September 21. 25% policy repo rate since late July.

25 lakh crore on Friday.