South Korea Posts Increase in Money Supply for 4th Month
(MENAFN) South Korea’s money supply experienced its fourth consecutive monthly increase, fueled by additional cuts in policy interest rates, revealed central bank data released Tuesday.
According to the Bank of Korea (BOK), the seasonally adjusted broad money supply (M2) rose by 0.8 percent in July to reach 4,344.3 trillion won (approximately 3.14 trillion U.S. dollars), marking a steady climb since April.
This upward trend coincides with the central bank’s repeated reductions of its benchmark interest rate, which dropped by 25 basis points in both February and May, settling at 2.50 percent. These cuts followed similar 25 basis point decreases implemented in October and November of the previous year.
Market anticipation persists for further rate easing in the latter half of the year.
Meanwhile, the narrow money supply (M1) increased by 1.2 percent in July after remaining unchanged the month before. M1 consists of currency in circulation, demand deposits, and transferable savings deposits that function like cash. The broader M2 category also includes money market funds, time deposits, and financial instruments maturing within two years.
Liquidity within financial institutions, measured by the Lf index, expanded by 0.6 percent during July. The liquidity aggregate—the most comprehensive measure of money supply—grew by 0.8 percent in the same period.
The Lf metric encompasses financial products with maturities exceeding two years, as well as liquid assets held by insurers and brokerage firms, in addition to M2 components. The liquidity aggregate further incorporates state and corporate bonds into the Lf total.
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