South Korea's money supply rose 0.9% in August from the previous month, accelerating from July as companies parked surplus cash in financial products. Year-on-year growth, however, slowed to 5.6%.
The average balance of M2, a broad measure of money supply on a seasonally adjusted basis, stood at 4,266.8 trillion won ($3.05 trillion) in August, up 39.1 trillion won, or 0.9%, from the previous month, the Bank of Korea said in a report on monetary and liquidity conditions released on the 15th. The gain was larger than July's 0.3% increase. On an unadjusted basis, M2 grew 5.6% from a year earlier, down slightly from 5.8% the previous month.
By financial product, time and savings deposits with maturities of less than two years increased 28.7 trillion won, driven by larger inflows of corporate surplus funds and a turnaround in household money. Money trusts with maturities of less than two years rose 14.2 trillion won, helped by deposits from semiconductor companies. Money market funds gained 12.6 trillion won as improved corporate earnings left firms with more cash to deploy.
By economic sector, non-financial corporations increased their money holdings by 33.9 trillion won, a bigger gain than the previous month's 20.4 trillion won. Other financial institutions added 1 trillion won, while households and nonprofit organizations added 300 billion won. Holdings by households and nonprofit organizations turned higher for the first time in four months.
By contrast, the average balance of M1, a narrow measure of money supply, fell 1.1% from the previous month to 1,357.6 trillion won. It was up 4.1% from a year earlier.
The average balance of liquidity aggregates of financial institutions, or Lf, rose 0.6% from the previous month to 6,386.4 trillion won. Broad liquidity, or L, stood at 8,094.3 trillion won at the end of August, up 0.2% from the end of the previous month.