[Yonhap]
[Yonhap]

Demand deposits surged by a record amount in May, driven by corporate short-term cash holdings, while the country's broad money supply expanded by 32.2 trillion won ($21.6 billion) — the largest monthly increase in nine months.

The Bank of Korea released its monetary and liquidity data Wednesday, showing the average broad money supply (M2) in May stood at 4,184.4 trillion won, up 32.2 trillion won, or 0.8 percent, from the previous month.

That marked the biggest monthly gain since August last year, when M2 grew by 44.5 trillion won, and extended a streak of consecutive monthly increases to seven, dating back to last November.

M2, the broad measure of money supply, covers cash, demand deposits and savings deposits — which together make up the narrower M1 aggregate — as well as short-term financial instruments that can be quickly converted to cash. Those include money market funds, time deposits and installment savings with maturities under two years, certificates of deposit, repurchase agreements, short-term financial bonds and money trusts with maturities under two years.

Demand deposits rose by 24.3 trillion won in a single month — the largest increase since records began in 2003 — as corporate short-term cash and margin deposits for securities and derivatives trading flowed in.

Money trusts with maturities under two years also rose by 3.8 trillion won, reversing a decline of 3.2 trillion won the previous month, partly on deposits from chipmakers including Samsung Electronics and SK hynix.

By economic sector, non-financial corporations posted the largest gain at 30.1 trillion won, followed by other financial institutions at 11.8 trillion won and social security funds and local governments at 3 trillion won. Households and non-profit organizations, however, saw a decrease of 19 trillion won.

The narrow money supply measure M1 — which covers only cash, demand deposits and savings deposits — reached 1,398.2 trillion won, up 1.9 percent, or 26.2 trillion won, from the previous month. The increase, driven largely by the rise in demand deposits, was the largest since January 2021, when M1 grew by 27.8 trillion won.


kimstar@heraldcorp.com