Money supply inches up in January amid market volatility: BOK

Korea's money supply rose for the 20th consecutive month in January, led by an increase in short-term funds amid high market volatility and lower deposit interest rates, central bank data showed Monday.

The country's M2, a key gauge of the money supply, stood at 4,203.8 trillion won ($2.89 trillion) in January, up 0.5 percent from the previous month, according to the preliminary data from the Bank of Korea (BOK).

The money supply has been on a constant increase since June 2023.

On a year-on-year basis, the money supply advanced 7.5 percent in January, marking the sharpest on-year gain since August 2022.

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

The increase came as demand deposits rose by 5.5 trillion won amid high volatility in the asset market. The recent fall in deposit interest rates also led to the growth in funds for investment.

Securities investment added 5.3 trillion won, while money flows into trust and money market funds (MMFs) went up by 4.7 trillion won and 4.5 trillion won, respectively.

Funds held by businesses surged 21.2 trillion won, with those held by households and nonprofit organizations growing 3.9 trillion won from a month earlier in January.

Korea's liquidity aggregate, the broadest measure of money supply, edged up 0.8 percent from a month earlier to stand at 7,175.3 trillion won in January, the data showed. (Yonhap)