Seoul: South Korea's money supply increased at the fastest pace in 17 months in August, driven by rising funds amid a strong stock market, central bank data showed Wednesday. The country's M2, a key measure of the money supply, stood at 4,400.2 trillion won (US$3.08 trillion) in August, up 1.3 percent from the previous month.

According to Yonhap News Agency, the increase in money supply marked the largest monthly rise since March 2024, when M2 rose by 1.5 percent. Compared with a year earlier, the figure jumped 8.1 percent in August, marking the sharpest annual increase since July 2022. The reading has been on the rise since April, reflecting sustained liquidity growth in the financial system.

The M2 is a measure of the money supply that counts cash, demand deposits, and other easily convertible financial instruments. The increase came as demand deposits rose by 14.3 trillion won on-month, while investment trusts grew by 12.8 trillion won. Time deposits and installment savings with maturities under two years also went up by 8.3 trillion won in August.

A BOK official noted that "bond-type funds have been on a constant increase, while demand deposits rose due to temporary deposits from the inflow of funds awaiting investment amid a strong local stock market and local governments' fiscal spending."