Investors preferred short-term papers on Tuesday as the rates offered on three-month CDs were more attractive compared with a one-year paper, dealers said.
On Tuesday, three-month certificates of deposit were quoted at 8.40-8.50 per cent, as against 8.50-8.60 per cent Monday, while three-month commercial papers were quoted at 8.60-8.80 per cent, unchanged from Monday.
Rates for the one-year tenure were 8.90-9.00 per cent, flat compared with previous levels.
The liquidity in the system is still tight and so fund houses are also preferring to hold on to cash.
The cash crunch is expected to worsen further next month owing to outflows towards advance tax payments by corporates.
Companies will pay the third instalment of advance tax, estimated to be around Rs 50,000 crore, by December 15.
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