Asia-Pacific

ROK's money supply growth falls to near 7-year low

(Xinhua)
Updated: 2011-06-09 14:12

SEOUL - South Korea's money supply growth fell to a near 7-year low in April, the central bank said Thursday.

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The country's M2, so-called broad money, increased 3.9 percent on-year to 1,684.8 trillion won ($1.56 trillion) in April after posting a 4.3 percent on-year expansion in March, the Bank of Korea (BOK) said in a statement.

The April reading marked the slowest level since an identical 3. 9 percent gain tallied for May 2004, and the on-year growth rate continued its downtrend since it peaked at 9.3 percent in July last year.

The on-year growth rate of M1, dubbed as narrow money, registered 9.6 percent in April, after recording 11.6 percent the previous month, the BOK said.

The slowing M1 growth came as transferable deposits at commercial banks contracted sharply after local companies paid corporate taxes at the end of March, according to the BOK.

The M1 covers currency in circulation and demand deposits equivalent to cash, while the M2 adds financial products with a maturity of less than two years such as deposits and financial bonds to M1.

Liquidity of financial institutions, also called Lf, recorded a 4.7 percent growth rate in April from a year earlier, down from a 4.7 percent gain the previous month.

The liquidity aggregate, the broadest measure of money supply, posted a 7.7 percent on-year rise in April, after expanding 7.5 percent in March, the BOK said.

The Lf covers financial products maturing in two years or more and liquidity at insurers and brokerage houses along with the M2. Liquidity aggregate added state and corporate bonds to the Lf.