Money supply up in April as deposits grow amid rising rates

South Korea's money supply grew in April as rising interest rates led to an increase in deposits, central bank data showed Wednesday.

The country's M2, a key gauge of the money supply, stood at 3,667.1 trillion won ($2.84 trillion) on average in April, up 8.5 trillion won, or 0.2 percent from a month earlier, according to the preliminary data from the Bank of Korea (BOK).

The rise followed a 0.1 percent on-month decline in March, which marked the first contraction since September 2018.

M2 is a measure of the money supply that counts cash, demand deposits and other easily convertible financial instruments.

April's increase stemmed in part from a rise in deposits amid rising interest rates in line with the central bank's recent monetary tightening.

Last month, the BOK hiked its policy rate by a quarter percentage point to 1.75 percent, the fifth increase in borrowing costs since August last year.

Demand deposits expanded 7.6 trillion won on-month, while time deposits grew 4.2 trillion won over the same period, the data showed.

Compared with a year earlier, the M2 expanded 9.4 percent but the growth slowed from the previous month's 10.8 percent rise. (Yonhap)