In December, South Korea's broad money supply (M2) increased by 23 trillion won due to rising deposits from households and businesses, according to a report by the Bank of Korea published on the 13th. The average balance of M2 stood at approximately 4,080 trillion won, reflecting a monthly increase of 0.6%. After a slight decline in November, this marks a return to growth, although the year-on-year growth rate has slowed down to 4.7%, down from 5.4% in September.

The M2 category encompasses liquid assets, including cash and easily convertible savings accounts, which provide a key indicator of liquidity in the market. Noteworthy increases were seen in foreign currency savings, primarily in deposits held by exporters and importers, which rose significantly. The rise in savings accounts is attributed to several factors, such as seasonal financial management needs for companies and an influx of household surplus funds, presumably linked to year-end bonuses.

Despite concerns regarding excess liquidity contributing to instability in exchange rates and housing prices, the Bank of Korea asserts that liquidity alone is not the primary issue at hand. They note that the recent increase in money supply is not excessive compared to the long-term average, indicating that current levels are lower than average interest rate hikes and that the market conditions should be monitored rather than panicked over fluctuations in liquidity.