South Korea's money supply growth slowed by more than half in a single month in July, as idle funds moved into time deposits amid rising interest rates. Non-financial companies increased their cash holdings, while household funds fell for a second straight month.
M2, a broad measure of money supply, stood at 4,225.6 trillion won on an average balance basis in July, up 12.7 trillion won, or 0.3%, from the previous month, the Bank of Korea said in a report on money and liquidity released on the 15th. It marked the ninth consecutive monthly increase since November last year, but the gain was less than half of June's 29.4 trillion won. Year-on-year growth eased to 5.8% from 6.0%.
By instrument, time and installment savings deposits with maturities of less than two years rose 27.3 trillion won, while money trusts gained 11.4 trillion won and financial debentures with maturities under two years increased 5.3 trillion won. Demand-access savings deposits fell 27 trillion won and money market funds dropped 11.6 trillion won. The shift suggests short-term idle funds moved into time deposits and similar products.
By economic sector, non-financial companies increased their money holdings by 20.6 trillion won. The increase was smaller than June's 45.7 trillion won but extended the upward trend. Money held by households and nonprofit organizations fell 11.6 trillion won, declining for a second consecutive month.
M1, a narrow measure that includes cash and demand deposits and other funds available for immediate payment, came to 1,372.5 trillion won, down 2.2% from the previous month. The decline reflected drops of 27 trillion won in demand-access savings deposits and 3.8 trillion won in demand deposits.
