Short-term rates down 5-10 bps

Rates on short-term money market instruments fell 5-10 basis points today because mutual funds received inflows in their schemes, dealers said.

Three-month certificates of deposit were dealt at 8.90-9.10 per cent compared with 9.05-9.15 per cent Monday, while the three-month commercial papers were at 9.05-9.15 per cent compared with 9.05-9.15 per cent.

Rates on one-year papers were 9.40-9.60 per cent, compared with 9.50-9.70 per cent Monday.

“Fund houses bought papers today due to inflows in their schemes and as most of the papers issued were for three-months,” said a dealer with a mutual fund.

Volumes also rose today because banks were keen on issuing CDs, as some papers mature this week and noting the fall in rates, dealers said. The banks today raised around Rs 4,075 crore via certificates of deposit compared with Rs 230 crore Monday.

“Some papers mature this week and so banks were keen on issuing CDs. Banks were issuing CDs as they do not expect the rate to fall significantly from current levels,” said a dealer with a state owned bank.