South Korea's money supply grows

Seoul -  South Korea's money supply grew 0.4 percent in June from a month earlier due to an increase in money market trust (MMT) and time deposits caused by risk-off sentiment, the central bank said Wednesday.

The country's M2, so-called broad money, reached a seasonally- adjusted 1,789 trillion won ($1.59 trillion) in June, up 0.4 percent from a month before, according to the Bank of Korea (BOK).

From a year before, the seasonally-unadjusted M2 expanded 5.9 percent, staying in the 5-percent range for five straight months, reported Xinhua.

The June growth was mainly attributed to strong demand for savings deposits and MMT with a maturity of less than two years, the central bank said, noting that the appetite for safe assets strengthened amid global economic slowdown and Europe's debt crisis.

The M1, dubbed as narrow money, amounted to a seasonally- adjusted 440.1 trillion won in June, up 0.4 percent from the previous month, according to the BOK. From a year earlier, the seasonally-unadjusted M1 advanced 4.7 percent.

The M1 covers currency in circulation and demand deposits equivalent to cash, while the M2 adds transferable savings deposit and financial products that mature in less than two years to M1.

Liquidity of financial institutions, also called Lf, grew 0.4 percent in June from the previous month. From the same month of last year, the Lf surged 8.5 percent.

The on-month growth of liquidity aggregate, the broadest measure of money supply, logged 1.1 percent in June, with the on- year figure reached 9.6 percent.

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

The BOK began releasing the seasonally-adjusted figures on a monthly basis starting January in a bid to better reflect short-term changes in monetary conditions. In addition, the bank offered the

seasonally-unadjusted data on a yearly basis to reflect the long-term monetary trend.