Seoul: South Korea's central bank announced plans to begin injecting liquidity via repurchase agreements (repo) regularly to boost the money supply starting next month. The Bank of Korea (BOK) detailed that commencing July 10, it will conduct operations buying bonds with a 14-day repo every Tuesday and selling them with a seven-day repo every Thursday.
According to Yonhap News Agency, the BOK has been primarily engaging in regular repo purchases to manage liquidity within the financial system. This new move is a response to a decrease in money supply from overseas, attributed to a declining current account surplus and increased outflows due to residents investing in overseas stocks.
Additionally, the demand for local money has been rising alongside the expanding economy and the digitization of financial transactions. The BOK noted that the schedule and maturities of the repos will be adjusted around the central bank's rate-setting meetings.