Money supply rises in Oct. on soaring bank deposits

SEOUL, Dec. 13 (Yonhap) -- South Korea's money supply marked an on-month growth in October as high interest rates prodded people to park more money at banks, central bank data showed Tuesday.

The country's M2, a key gauge of the money supply, stood at 3,757.9 trillion won (US$2.88 trillion) on average in October, up 0.4 percent, or 13.8 trillion won, from a month earlier, according to the preliminary data from the Bank of Korea (BOK).

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

The growth came as banks' time deposits soared 45.9 trillion won, boosted by rising interest payments in line with the BOK's rate hikes to curb inflation.

It is the largest growth since the bank began compiling related data in December 2001.

On-demand savings, however, fell 8.7 trillion won, and money market funds declined 13.1 trillion won over the cited period, the data showed.

In October, the central bank hiked the benchmark interest rate from 2.5 percent to 3 percent. It was the first time in about 10 years that the rate has risen to the 3 percent range.

During its latest rate-setting meeting held last month, the BOK further raised the policy rate by a quarter percentage point.

graceoh@yna.co.kr
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