money supply-May tally

Money supply up for 2nd month in May on increased deposits

SEOUL, July 12 (Yonhap) -- South Korea's money supply grew for a second straight month in May on increased deposits amid rising interest rates, central bank data showed Tuesday.

The country's M2, a key gauge of the money supply, stood at 3,696.9 trillion won (US$2.82 trillion) on average in May, up 29.8 trillion won, or 0.8 percent, from the previous month, according to the preliminary data from the Bank of Korea (BOK).

The money supply rose for the second straight month in May after posting the first contraction since September 2018 in March. The May rise also marked the largest on-month increase so far this year.

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

The May increase mainly resulted from a rise in deposits amid rising interest rates in line with the BOK's monetary tightening.

Time deposits expanded 21 trillion won on-month and demand deposits grew 7.4 trillion won in May, the data showed.

In May, the BOK raised the policy rate by a quarter percentage point to 1.75 percent, the fifth increase in borrowing costs since August last year, in a bid to tame inflation.

Compared with a year earlier, the M2 rose 9.3 percent in May, slowing from a 9.4 percent on-month rise in April.

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