Sovereign bonds in India rallied after the central bank said it will purchase debt to meet the cash needs of the banking system. The Reserve Bank of India late Friday said it would buy 100 billion rupees ($1.5 billion) of securities with maturities ranging from 2020 to 2033 maturities on May 17. The purchases come after the shortest bond on sale Friday was rescued by underwriters for a third straight auction. \u201cThe announcement should be seen as a positive surprise by the market as it comes earlier than expected and especially amid liquidity surplus conditions,\u201d Vivek Rajpal and Prashant Pande, rate strategists at Nomura Holdings Inc. wrote in a note. The yield on the benchmark 7.17 percent debt maturing in 2028 fell 11 basis points to 7.62 percent in Mumbai, its biggest fall since April 5 when the RBI cut its inflation forecast. The rupee lost 0.4 percent to 67.14 to a dollar, its weakest level since February last year. Surplus cash held by banks dropped to 380 billion rupees as of May 3 from a 1.1-trillion-rupee high in April, according to the Bloomberg Economics India Banking Liquidity Index. The open-market purchases announcement - the first since October 2016 - adds to the measures taken by authorities to support the market. These steps include raising the cap for foreigners, trimming debt sales and allowing banks to spread out trading losses. Yet, yields surged 37 basis points in April as hawkish central bank minutes with flaring oil prices sparked fears of the central bank to raise rates faster than what most analysts are forecasting. Nomura expects the central bank to buy up to 1 trillion rupees of debt via this route in the current fiscal year that ends in March, the strategists wrote. The central bank will have to do to open market purchases of $22 billion in the current fiscal, which includes $11 billion of budgeted government buyback, according to Bank of America Merrill Lynch.