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S.Korea finmin cautions about excessive liquidity
Reuters - Thursday, April 16
SEOUL, April 16 - The South Korean financial system is already flush with excessive cash liquidity and additional fund injections by the central bank could only aggravate the situation, Finance Minister Yoon Jeung-hyun said on Thursday.
"The fact that there is 800 trillion won of liquid funds means liquidity is definitely in excess. Additional funds from the Bank of Korea will bring us to an 'excessive excess liquidity' situation," Yoon said in response to a question from a lawmaker during a parliamentary committee session.
June treasury bond futures <KTBc1> turned sharply lower after Yoon's comment to end down 13 ticks at 110.77, far off a session high of 110.98 set earlier in the day.
But analysts said Yoon was probably not suggesting the direction of monetary policy, but cautioning against the recent steep gains in the local stock market as well as property prices in parts of the capital Seoul following the central bank's aggressive rate-cutting campaign since late last year.
"I think he was referring to the soaring stock prices especially on the Kosdaq market and sharp rises in housing prices in several areas," said Park Sang-hyun, chief economist at HI Investment and Securities.
Seoul's junior Kosdaq stock market <.KQ11> has jumped 50 percent so far this year to above mid-September levels when the current global financial crisis heightened.
The main board's benchmark KOSPI <.KS11> has risen nearly 20 percent so far this year and now stands about 10 percent below the pre-crisis levels. (Reporting by Cheon Jong-woo, Writing by Yoo Choonsik; Editing by Kazunori Takada)
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