Foreign banks in Malaysia raise their cost of borrowing

AsiaOne | .

Borrowing costs are set to rise in Malaysia, with a number of banks having raised their base rates (BR), partly as a result of a liquidity crunch brought about by a shortage of ringgit and US dollars, analysts say.

As of last week, foreign banks including OCBC Bank (Malaysia) and United Overseas Bank (Malaysia) had bumped up their BRs; HSBC Bank Malaysia will make its change on Friday.

The hikes to the base rate - and consequently the effective lending rate (ELR) - have emerged despite the central bank maintaining the key overnight policy rate (OPR) at 3.25 per cent, so as not to add further pressure to businesses and individuals struggling with loan repayments in a weak economy made worse by a feeble ringgit.

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