Asia Pacific
S.Korea's money supply keep rising on prolonged low rate
Last Updated: 2018-10-17 13:56 | Xinhua
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Money supply in South Korea kept rising in August on the prolonged trend of low interest rate, central bank data showed Wednesday.

The M2, called broad money, grew 6.7 percent in August from a year earlier, marking the identical growth rate with the previous month and the highest since January last year, according to the Bank of Korea (BOK).

The fast increase came as the BOK refrained from altering its policy rate since the bank raised it to the current rate of 1.50 percent in November last year from an all-time low of 1.25 percent.

Money supply in the household sector fell for the first time in five and a half years, but it was attributed to demand to purchase new home amid the near-record-low borrowing cost.

The government unveiled a set of measures to curb speculative investment in the real estate market, but households continued to buy new home with saved money as well as borrowed money.

The M1, dubbed narrow money, increased 4 percent in August from a year ago.

The M1 refers to currency in circulation, demand deposits and transferable savings deposits equivalent to cash. The M2 adds money market funds, time deposits and financial products that mature in less than two years to M1.

Liquidity of financial institutions, called Lf, expanded 7.1 percent in the cited period. The year-over-year expansion of liquidity aggregate, the broadest measures of money supply, was 6.2 percent.

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

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