In January, market liquidity increased by about 28 trillion won. Corporations' foreign-currency deposits rose on strong exports, and funds waiting on the sidelines for investment also grew as stock prices climbed.
According to "currency and liquidity" data released by the Bank of Korea on the 13th, broad money (M2, average balance basis) in January rose 27.7 trillion won (0.7%) from the previous month to 4,108.9 trillion won.
Market liquidity has increased for three straight months from November last year (+4.4 trillion won) through January. The growth rate also widened from flat in October last year to 0.1% in November, 0.5% in December, and 0.7% in January.
M2 under the previous standard including revenue securities increased by 53.3 trillion won (+1.2%) from the previous month to 4,560.6 trillion won. The Bank of Korea (BOK) has excluded highly volatile revenue securities from the market liquidity indicator since October last year in line with International Monetary Fund (IMF) recommendations.
By financial product, other money-like products surged from 10.9 trillion won in December last year to 21 trillion won in January. This was due to an increase in corporations' foreign-currency deposits and individuals' deposits in cash management accounts (CMA). Demand deposits also expanded from 4 trillion won to 15.5 trillion won as households' funds waiting for investment increased.
A Bank of Korea (BOK) official said, "The increase in foreign-currency deposits held by corporations due to higher exports at the end of last year affected January," adding, "CMA deposits increased as funds waiting for investment rose in step with stock gains."
By sector, nonfinancial corporations expanded from 9 trillion won to 18.9 trillion won, and other financial institutions from 4 trillion won to 15.2 trillion won. In contrast, households and nonprofit organizations shrank from 10.3 trillion won to 1.9 trillion won, and the other sector saw its decline widen from -4.4 trillion won to -9.9 trillion won.
In January, narrow money (M1, average balance basis) increased by 17.8 trillion won from the previous month to 1,356.4 trillion won. Financial institution liquidity (Lf) rose by 46.3 trillion won to 6,097.8 trillion won, and broad liquidity (L) increased by 23.9 trillion won to 7,759.2 trillion won.