Rates on short-term money market instruments rose by 5 basis points (bps) on Wednesday due to the continued tight liquidity in the banking system, dealers said.
“The liquidity in the system is still in deficit mode and liquidity is expected to remain tight in coming weeks too because of advance tax outflows,” a dealer with a state-owned bank said. The spread between a three-month and one-year CD is around 50-60 bps.
Three-month certificates of deposit were quoted at 8.20-8.30 per cent as against 8.20-8.25 per cent Tuesday, while three-month commercial papers were quoted at 8.60-8.65 per cent unchanged from Tuesday.
The rates on one-year tenure largely remained unchanged at 8.70-8.90 per cent, as demand from investors is limited for such papers.
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