Issuances of certificates of deposit (CDs) continued to decline today as banks were not keen on raising funds due to the abundant liquidity in the system, dealers said.
Banks issuing CDs are only refinancing their existing ones as rates have fallen significantly over the past two weeks. Rates on short-term money market instruments have fallen 40-50 basis points across tenures. “Due to the low supply by banks and high demand from investors, rates have been pushed down,” said a treasurer with a state-owned bank.
Mutual funds are mostly investing in papers maturing up to November.