Malaysia cuts banks' statutory reserve requirement ratio

Kuala Lumpur

MALAYSIA's central bank has cut the statutory reserve requirement (SRR) ratio of banks to 3.5 per cent from 4 per cent with effect from Feb 1 to address a liquidity crunch in the financial system following capital flight from funds returning to higher-yielding assets in the United States and Malaysians seeking steadier currencies than the depreciating ringgit.

Bank Negara Malaysia (BNM) maintained the overnight policy rate (OPR) at 3.25 per cent and analysts do not foresee a cut to the key lending rate unless the SRR reduction proves inadequate to stimulate credit growth.