Korea's money supply grows by record amount in April

South Korea's money supply grew by the largest amount ever in April on a sharp increase in funds held by local companies apparently seeking to prepare for the shock from the new coronavirus pandemic, central bank data showed Wednesday.

The country's M2 came to 3,018.6 trillion won ($2.51 trillion) as of end-April, according to preliminary data from the Bank of Korea (BOK).

The reading marks a 1.1 percent, or 34 trillion won increase from a month before, which is the largest on-month gain since the central bank began compiling such data in December 2001.

From a year earlier, the amount rose by 9.1 percent, which marks the highest on-year increase since the 9.4 percent on-year rise posted in September 2015, according to the BOK.

M2 is a measure of the money supply that counts the currency in circulation, including bank debentures and deposits with a maturity of less than two years, along with stock investments. It is a key economic indicator closely monitored by the authorities.

The sharp rise was largely attributed to an increase in money held by firms.

Funds held by non-financial businesses here gained 22.2 trillion won from a month earlier,  while those held by financial firms added 10.3 trillion won.

Such an increase, however, also follows a series of unprecedented efforts by the local government and the BOK to support the pandemic-hit economy.

The government has successfully pushed for two supplementary budgets, together worth over 20 trillion won, and is now pushing for a third extra budget, worth over 30 trillion won.

The BOK has also delivered two rounds of a rate cut in less than three months since the country reported its first confirmed case of COVID-19 on Jan. 20, sending the key rate to a new record low of 0.50 percent. (Yonhap)