Money supply up in July on rate hike-induced deposit growth

SEOUL, Sept. 16 (Yonhap) -- South Korea's money supply grew in July from a month earlier as rising interest rates induced an increase in deposits, central bank data showed Friday.

The country's M2, a key gauge of the money supply, stood at 3,719.5 trillion won (US$2.66 trillion) on average in July, up 10.4 trillion won, or 0.3 percent, from a month earlier, according to the preliminary data from the Bank of Korea (BOK).

Compared with a year earlier, the money supply expanded 8 percent, though its growth was slower than the previous month's on-year rise of 8.8 percent.

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

The increase came in part from a rise in deposits encouraged by the BOK's move to hike its policy rate to rein in inflation.

The BOK has hiked the rate seven times by a combined 2 percentage points since August last year, pushing up deposit rates at local lenders.

Time deposits, in particular, jumped 21 trillion won on-month in July, as money was attracted for stable interest income amid growing economic uncertainty, the BOK said.

kokobj@yna.co.kr
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