New Delhi, Sept. 5 -- Interest rates on three-month certificates of deposit (CDs) have fallen by more than 100 basis points from their peak this year as a surge in FCNR (B) inflows has pushed liquidity higher in the banking system, according to ICICI Bank Research.

The report said the impact of the foreign currency inflows is being felt more strongly in short-term money market rates, which have moved well below the policy repo rate. Rates on six-month and one-year CDs have also declined by around 100 basis points and 90 basis points, respectively, from their peaks earlier this year.

The sharp decline in short-term borrowing costs comes after gross FCNR (B) inflows reached around USD 127 billion, significantly changing the liquidity outl...