August 3, 2011

Cambodian central bank to consider increasing reserve rate to 16% in mid-August


PHNOM PENH -- The National Bank of Cambodia ( NBC) will consider increasing the reserve requirement rate for commercial banks from current 12 percent to 16 percent in mid-this month to curb inflationary pressures and to reduce liquidity in the economy, Nguon Sokha, NBC's director general, said Tuesday.

"The monetary board of the central bank will decide in mid-this month if the reserve rate will be raised to 16 percent or not," she told Xinhua by telephone. "In my point of view, the rate must be raised in order to curb the high pressure of inflation and to hold more capital at the central bank."

The reserve requirement is a proportion of customer deposits that must be held by a bank rather than being lent to borrowers; it is usually held in a bank's account with the central bank.

The country's inflation rate in May jumped to 6.5 percent due to soaring prices of petroleum, electricity, transport services, clothing, food, and consuming products, according to the latest statistics from the National Institute of Statistics.

"The inflation rate in Cambodia could hit 8 percent this year," Nguon Sokha forecast.

Earlier this year, the International Monetary Fund, the World Bank, and the Asian Development Bank forecast the country's inflation rate in 2011 could be at 6.5 percent, 5 percent and 5.5 percent respectively.

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