Money supply rises at sharpest pace in 9 months on deposit gains

Korea's money supply rose at the sharpest clip in nine months in May on an increase in short-term deposits and funds awaiting investment, central bank data showed Wednesday.

The country's M2, a key gauge of the money supply, stood at an average of 4.18 quadrillion won ($2.81 trillion) in May, up 0.8 percent, or 32.2 trillion won, from a month earlier, according to the preliminary data from the Bank of Korea (BOK).

It marked the largest on-month gain since August last year, when the M2 increased by 44.5 trillion won.

The figure has been on a steady rise since November.

M2 is a measure of the money supply that includes cash, demand deposits and other easily convertible financial instruments.

The BOK said short-term deposits and money market funds that mostly invest in short-term products increased in May amid a rally in the local stock market.

By sector, liquidity increased by 30.1 trillion won among nonfinancial corporations and 11.8 trillion won among financial institutions, while liquidity held by households and nonprofit organizations fell by 19 trillion won, the data showed.

Yonhap