S. Korea's money supply growth slows in April

By Kim Soo-yeon
SEOUL, June 10 (Yonhap) -- Growth of South Korea's broad money supply slowed in
April amid a prolonged economic slump, but the amount of short-term funds jumped,
the central bank said Wednesday.

The country's liquidity aggregate, the widest measure of money supply, reached
2,364.9 trillion won (US$1.88 trillion) as of the end of April, up 9.3 percent
from a year earlier, according to the Bank of Korea (BOK).
April's growth rate was down from an annual 10.6 percent increase in March and
marked the lowest expansion since August 2006 when it grew at the same annual
rate. The liquidity aggregate covers currency in circulation, all types of
deposits at financial institutions and state and corporate bonds.
"The slowdown in April came despite a large current account surplus, as lenders
remained reluctant to lend money to households and firms," said Kim Hwa-yong, a
BOK official.
However, the narrowest gauge of money supply, or M1, soared as investors were
unable to find adequate long-term investment vehicles amid a protracted economic
slump, he said.
M1 surged an annual 17.4 percent in April, up from 14.3 percent from the previous
month, the BOK said. It marked the fastest expansion since Sept. 2002 when M1
jumped 18 percent.
M1 covers which covers currency in circulation, demand deposits and savings at
money market deposit accounts.
The data comes amid market concerns that ample liquidity, caused by the BOK's
soft monetary policy, will push up consumer prices and spark asset inflation down
the road when the local economy begins to pick up.
But the BOK has said that South Korea's liquidity is not excessive enough to
trigger serious side effects such as escalating inflationary pressure and an
asset bubble, saying that money is still not fully flowing in the real economy.
The data comes a day before the BOK makes its monthly interest-rate decision. The
central bank is widely forecast to freeze the benchmark seven-day repo rate at a
record low of 2 percent for the fourth straight month.
The bank made six consecutive rate cuts totaling 3.25 percentage points between
October and February in a bid to bolster the slowing economy.
sooyeon@yna.co.kr
(END)