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2025-12-16 13:10:21
[Bank of Korea: Attributing the Weakness of the Korean Won to Excess Domestic Liquidity is an Exaggeration] 1. The Bank of Korea (BOK) released a report on Tuesday stating that attributing the weakness of the Korean won and rising housing prices primarily to excess domestic liquidity is an exaggeration. The BOK analyzed that the won's exchange rate is influenced more by factors such as increased overseas securities investment by residents and export companies' tendency to hold foreign exchange than by liquidity conditions; and the rise in real estate prices is mainly due to the continued inflow of previously accumulated liquidity, rather than new money supply. 2. The BOK had previously maintained its interest rate unchanged for the fourth consecutive time at its meeting at the end of November, mainly considering that the sharp depreciation of the won limited the scope for further easing policies, while the continued rise in housing prices in Seoul and other areas also posed risks to financial stability. The BOK emphasized in its report that the current domestic liquidity situation is not as serious as some commentators have worried, and it is not the sole reason for the weakness of the won and the inflation of asset prices.
