South Korea’s money supply continues to grow

Seoul, May 8 (IANS) South Korea’s money supply has continued to grow amid the central bank’s accommodative monetary policy, data showed Wednesday.

The country’s M2, or broad money, rose 0.5 percent from a month earlier to a seasonally-adjusted 1,862.1 trillion won ($1.71 trillion) in March after increasing 0.7 percent in the prior month, according to the Bank of Korea (BOK).

The reading came amid the persistent mood of accommodative monetary policy created by the central bank that kept its benchmark interest rate on hold at 2.75 percent for six straight months in April, reported Xinhua.

More experts expected the BOK to freeze the rate once again at the May monetary policy meeting scheduled for Thursday, according to a survey by Korea Financial Investment Association.

The finance ministry unveiled its supplementary budget worth 17.3 trillion won ($15 billion) that was passed through parliament Tuesday. It was expected to boost money supply down the road.

From a year before, the seasonally-unadjusted M2 expanded 5 percent in March after increasing 5.3 percent in the prior month.

The M1, dubbed as narrow money, rose 1 percent in March to a seasonally-adjusted 467.7 trillion won. From a year earlier, the seasonally-unadjusted figure advanced 7.4 percent.

The M1 covers currency in circulation and demand deposit equivalent to cash, while the M2 adds transferable savings deposit, time deposit and financial products that mature in less than two years to M1.

Liquidity of financial institutions, also called Lf, rose 0.9 percent in March from the prior month. From the same month of last year, the Lf increased 6.8 percent.

The on-month growth of liquidity aggregate, the broadest measure of money supply, logged 0.7 percent in March, with the on- year figure posting a 7.1 percent rise.

The Lf covers financial products with a maturity of more than two years and liquidity at insurers and brokerages along with M2, while the liquidity aggregate adds state and corporate bonds to the Lf.

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