Mutual funds invested in short-term money market instruments today due to inflows in their schemes. The rates also fell by five to eight basis points due to buying interest, dealers said.
The three-month certificates of deposit were dealt at 8.9-9.10 per cent, against 9-9.20 per cent on Monday, while three-month commercial papers were at 9.15-9.30 per cent, as against 9.25-9.40 per cent on Monday.
Rates on one-year papers were 9.50-9.65 per cent, unchanged from Monday.
The National Housing Bank today placed two-month CPs at 7.85 per cent, down from 7.90 per cent issued on Monday.
“There are also strong expectations the central bank would increase rates in their policy on January 25. This had pushed up the rates slightly in the past two to three days,” said a dealer with a mutual fund.
Market participants expect RBI to raise repo and reverse repo rate by 25 basis points at its quarterly monetary policy review on January 25.