Seoul, March 17 South Korea's money supply rose for the 20th consecutive month in January, led by an increase in short-term funds amid high market volatility and lower deposit interest rates, central bank data showed on Monday.
The country's M2, a key gauge of the money supply, stood at 4,203.8 trillion won (US$2.89 trillion) in January, up 0.5 percent from the previous month, according to the preliminary data from the Bank of Korea (BOK).
The money supply has been on a constant increase since June 2023, reports Yonhap news agency.
On a year-on-year basis, the money supply advanced 7.5 percent in January, marking the sharpest on-year gain since August 2022.
The M2 is a measure of the money supply that counts cash, demand deposits and other easily convertible financial instruments.
The increase came as demand deposits rose by 5.5 trillion won amid high volatility in the asset market. The recent fall in deposit interest rates also led to the growth in funds for investment.
Securities investment added 5.3 trillion won, while money flows into trust and money market funds (MMFs) went up by 4.7 trillion won and 4.5 trillion won, respectively.
Funds held by businesses surged 21.2 trillion won, with those held by households and nonprofit organisations growing 3.9 trillion won from a month earlier in January.
South Korea's liquidity aggregate, the broadest measure of money supply, edged up 0.8 percent from a month earlier to stand at 7,175.3 trillion won in January, the data showed.
Meanwhile, the financial regulator said on Monday that household loan growth is still manageable, although its growth spiked last month amid the spring moving season and a rise in home prices in some areas of Seoul.
Last month, household loans extended by all financial institutions rose 4.3 trillion won from a month earlier to reach 1,667 trillion won, shifting from an on-month dip the previous month.
In particular, household loans extended by banks rose for the first time in three months in February.
"Household loan growth accelerated in February, but it is still within manageable levels," the Financial Services Commission (FSC) said.
But recently there are signs of home prices gaining traction on the back of monetary easing, banks' relaxation of some of their lending rules and the government's lifting of part of the land transaction permission zones in Seoul.
Last week, the Bank of Korea warned that such conditions could raise expectations of further increases in housing prices and lead to a rise in household debts.
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