South Korea’s money supply continued to grow in January 2024, marking the 20th consecutive month of increase, according to data released by the Bank of Korea (BOK) on Monday. The rise was mainly driven by a surge in short-term funds, as investors adjusted to high market volatility and declining deposit interest rates.
Factors Behind the Increase
The report highlighted that investors shifted their funds to short-term financial products as deposit rates fell, making long-term savings less attractive. Additionally, ongoing market uncertainties encouraged individuals and businesses to keep their money in liquid and easily accessible assets.
Impact of Market Volatility
Market fluctuations in early 2024 prompted investors to seek safer and more flexible financial instruments, leading to higher demand for short-term deposits and money market funds. Lower returns on fixed deposits also contributed to this trend, as savers looked for better alternatives.
Economic Outlook
Experts believe that the rising money supply could influence inflation trends and monetary policy decisions in the coming months. The Bank of Korea will closely monitor liquidity conditions and may adjust interest rates or financial policies based on economic stability and inflation control measures.
The continued growth in money supply reflects changing financial behaviors in response to market conditions and interest rate policies, signaling potential shifts in South Korea’s economic landscape in 2024.
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