Seoul: South Korea's money supply rose for the second consecutive month in May, driven by increased investment in funds as the stock market rebounded, central bank data showed Tuesday. The country's M2, a key gauge of the money supply, stood at 4,279.5 trillion won (US$3.09 trillion) in May, up 1 percent from a month earlier, according to the preliminary data from the Bank of Korea (BOK).

According to Yonhap News Agency, this marked the second consecutive monthly increase. The M2 is a measure of the money supply that counts cash, demand deposits, and other easily convertible financial instruments. Of the total, securities rose by 16.4 trillion won, money trusts by 8.3 trillion won, and savings deposits with free withdrawals by 6.1 trillion won.

"As the stock market showed signs of recovery, beneficiary certificates, particularly those tied to equity-type securities, increased," a BOK official said. "The rise in savings deposits with free withdrawals was driven by inflows of funds earmarked for upcoming fiscal spending by local governments."

Demand deposits, however, fell by 2.3 trillion won as some idle funds were withdrawn for investment amid the asset market recovery, the official added.