The Bank of Korea said on Tuesday that it was “overstated” to blame the weak exchange rate of the won and the rise in housing prices on the domestic market's abundant liquidity situation. “In terms of exchange rates, factors such as residents' increased investment in overseas securities and export companies' tendency to hold foreign exchange seem to have a greater impact than the liquidity situation,” the Bank of Korea said in a report. The Bank of Korea also said that the liquidity accumulated in the past has been flowing into the local real estate market and driving up prices, not the new money supply. Prior to that, the Bank of Korea kept interest rates unchanged for the fourth time in a row at the end of November. The sharp drop in the won reduced the room for further easing policies, and the continued rise in housing prices in Seoul led to a rise in financial stability risks. According to the Bank of Korea, the domestic liquidity situation is not as worrying as some commentators say. They believe that excess liquidity is the main culprit behind the weak won and asset price inflation.

The Bank of Korea said on Tuesday that it was “overstated” to blame the weak exchange rate of the won and the rise in housing prices on the domestic market's abundant liquidity situation. “In terms of exchange rates, factors such as residents' increased investment in overseas securities and export companies' tendency to hold foreign exchange seem to have a greater impact than the liquidity situation,” the Bank of Korea said in a report. The Bank of Korea also said that the liquidity accumulated in the past has been flowing into the local real estate market and driving up prices, not the new money supply. Prior to that, the Bank of Korea kept interest rates unchanged for the fourth time in a row at the end of November. The sharp drop in the won reduced the room for further easing policies, and the continued rise in housing prices in Seoul led to a rise in financial stability risks. According to the Bank of Korea, the domestic liquidity situation is not as worrying as some commentators say. They believe that excess liquidity is the main culprit behind the weak won and asset price inflation.