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Key Points

South Korea's money supply has been growing steadily for four consecutive months. The increase in July was primarily driven by rising deposits and stock fund inflows. Meanwhile, the central bank has maintained interest rates to address financial stability concerns. Import prices also rose in August despite falling oil prices due to the weaker Korean won.

Key Points: South Korea Money Supply Rises Fourth Month Amid Deposit Stock Gains

  • M2 money supply reaches 4,344.3 trillion won in July marking 0.8% monthly increase
  • Growth driven by rising deposits and stock fund inflows throughout fourth consecutive month
  • BOK maintains benchmark interest rate at 2.5% for financial stability concerns
  • Import prices rise 0.3% in August despite falling global oil prices due to weaker won
2 min read

Money supply rises in July amid deposit, stock fund gains: BOK

South Korea's M2 money supply grows 0.8% in July to 4,344.3 trillion won as deposits and stock funds increase while BOK holds rates steady.

"In September, volatility in the won-dollar exchange rate and global oil prices is not significant - BOK official Lee Moon-hee"

Seoul, Sep 16

South Korea's money supply increased for the fourth consecutive month in July, fuelled by a rise in funds and deposits, central bank data showed on Tuesday.

The country's M2, a key gauge of the money supply, stood at 4,344.3 trillion won ($3.13 trillion) in July, up 0.8 percent from a month earlier, according to the preliminary data from the Bank of Korea (BOK).

The figure has been on an increase since April. The M2 is a measure of the money supply that counts cash, demand deposits and other easily convertible financial instruments, reports Yonhap news agency.

The on-month increase came as deposits and stock fund inflows increased. South Korea's central bank kept its benchmark interest rate unchanged for the second consecutive time at 2.5 percent last month in a bid to ensure financial stability amid persistent concerns about rising housing prices and household debt.

In May, the BOK cut its base rate by a quarter percentage point.

Meanwhile, import prices rose for the second consecutive month in August despite falling global oil prices, mainly due to a weaker Korean won, central bank data showed.

The import price index went up 0.3 percent last month from a month earlier, following a 0.8 percent hike, according to preliminary data from the Bank of Korea (BOK).

The increase came as the local currency fell to 1,389.66 won against the U.S. dollar in August from an average of 1,375.22 won per dollar in July, the BOK said.

Import prices are a key factor of inflation as they affect production costs and consumer prices through the supply chain.

The average price of Dubai crude, South Korea's benchmark, stood at US$69.39 per barrel in August, down 2.1 percent from the previous month.

The export price index also rose for the second consecutive month in August, gaining 0.7 percent from the previous month, the data showed.

"In September, volatility in the won-dollar exchange rate and global oil prices is not significant, though we need to monitor the situation given domestic and global uncertainties," BOK official Lee Moon-hee told a press briefing.

—IANS

- IANS

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Reader Comments

P
Priya S
The won weakening against dollar is concerning for global trade. When major currencies fluctuate, it affects emerging markets like India too. Hope our forex reserves remain strong enough to handle such volatility. 🇮🇳
A
Aditya G
Stock fund inflows increasing shows investor confidence. Similar trend happening in Indian markets too - retail participation has been growing steadily. Good time for SIP investments! 📈
S
Sarah B
The connection between import prices and inflation is crucial. India faces similar challenges with currency fluctuations affecting import costs. Hope our policymakers are watching these global trends carefully.
Karthik V
Fourth consecutive month of money supply growth indicates economic recovery momentum. Similar to what we're seeing in India post-pandemic. However, we need to ensure this doesn't lead to overheating and high inflation.
M
Michael C
While the data shows growth, the BOK official's caution about "domestic and global uncertainties" is telling. Every economy is walking a tightrope between growth and stability in these uncertain times.

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