S. Korea’s Money Supply Growth Expands at Fastest Clip in Two Years

Seoul, July 09 (QNA) – South Korea’s M2 money supply expanded at the fastest clip in nearly two years in May due to an increase in balance at non-banking financial firms, central bank data showed Wednesday.

M2 rose 6% on-year to 1,982 trillion won (US$1.9 trillion) in May, quickening from a 5.5% increase in the previous year, according to the Bank of Korea. The pace is the fastest since a 6% gain in July 2012.

From a month earlier, the country’s M2 rose 0.5% on a seasonally adjusted basis, slightly picking up from a 0.4% gain in April.

M2 includes currency in circulation as well as types of deposits with a maturity of less than two years at lenders and non-banking financial institutions.

It does not cover those with a maturity of two years or longer, government bonds or corporate bonds, South Korea’s News Agency (Yonhap) reported.

A central bank official attributed the on-year gain to increase in money supply at non-banking financial institutions, which tends to fluctuate more depending on financial market conditions and investment decisions.

The official added that the quickening pace also stemmed from base effect as M2 growth had slowed in the same month last year.

In a separate statement, the central bank said M2 is estimated to have increased in the high-5 percent range in June, slowing from the 6% growth in May.

The statement also said bank lending growth accelerated in June as home-backed loans gained from the previous month. Outstanding household loans extended by lenders jumped by 2.9 trillion won in June, more than doubling from a 1.2 trillion won gain the previous month. (QNA)

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