Money supply up in April as deposits rise amid rising rates

(Yonhap)

South Korea’s money supply rose in April as higher interest rates led to an increase in deposits, central bank data showed on Wednesday.

The country’s M2, a key indicator of money supply, averaged 3,667.1 trillion won ($2.84 trillion) in April, up 8.5 trillion won, or 0, 2% from the previous month, according to preliminary data from the Bank of Korea (BOK).

The rise follows a 0.1% month-on-month decline in March, which marked the first contraction since September 2018.

M2 is a measure of money supply that counts cash, demand deposits, and other readily convertible financial instruments.

April’s increase was partly the result of higher deposits amid rising interest rates related to the central bank’s recent monetary tightening.

Last month, the BOK raised its benchmark rate by a quarter of a percentage point to 1.75%, the fifth increase in borrowing costs since August last year.

Demand deposits increased by 7.6 trillion won in a month, while time deposits increased by 4.2 trillion won in the same period, the data showed.

Compared to a year earlier, M2 rose 9.4%, but growth slowed from the 10.8% increase the previous month. (Yonhap)

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