SEOUL, October 15 (AJP) — South Korea's broad money growth slowed for a second month in August, while the monthly pace accelerated amid larger inflows of corporate funds into short-term deposits and trusts after the central bank hinted more tightening following back-to-back rate hikes.
M2 rose 5.6 percent from a year earlier, easing from 5.8 percent in July and 6.0 percent in June, according to data released Thursday by the Bank of Korea (BOK).
On a seasonally adjusted basis, M2 increased 0.9 percent from the previous month to 4,266.8 trillion won, accelerating from a 0.3 percent gain in July.
Short-term deposits were the biggest source of the monthly increase, adding 28.7 trillion won as surplus corporate funds flowed in and household balances turned higher. Money trusts also expanded as semiconductor companies placed more funds into the products, while money market funds rebounded from a decline a month earlier.
The shift was also visible by holder. Nonfinancial companies added 33.9 trillion won, extending their run of increases to 10 consecutive months, while household and nonprofit holdings returned to growth for the first time in four months.
Under the previous M2 definition, money supply expanded 9.9 percent on year, down from 10.3 percent a month earlier.
Investment fund shares remained a major driver of the older measure, climbing 42.6 percent from a year earlier and contributing 4.5 percentage points to its annual increase. The contribution had stood at 5.0 percentage points in July.
The August data cover the month when the BOK raised its base rate by another 25 basis points to 3.00 percent, marking its second consecutive increase.
Narrow money, or M1, fell 1.1 percent from the previous month, while its annual growth rate eased to 4.1 percent.
Broader liquidity measures were steadier. Financial institution liquidity, or Lf, and the broadest liquidity measure, L, both grew 7.2 percent on year.
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