In October, the circulating money surpassed 4,110 trillion won. The currency supply increased by nearly 40 trillion won in just one month, marking the largest rise in seven months. This is attributed to an increase in 'investment standby' funds as concerns over poor Corporate earnings and export markets intensify.
According to the "October 2024 currency and liquidity" report released by the Bank of Korea on the 16th, the M2 (broad money supply, average balance) increased by 39.7 trillion won (1%) from the previous month to 4,110.4 trillion won. The increase rate compared to the previous month was the largest since March (1.7%). M2 has been rebounding since June last year and has been rising for 17 consecutive months.
M2 is a broad measure of currency, including cash and demand deposits, as well as savings deposits such as passbook and MMF (money market funds), time deposits and installment savings of less than two years, securities, and repurchase agreements (RP), generally referring to the currency supply in circulation.
By product, revenue securities (9.3 trillion won), MMF (7.2 trillion won), time deposits and installment savings (5.9 trillion won), and money trusts (5.2 trillion won) all increased compared to the previous month. The increase in time deposits and savings was supported by banks' proactive efforts to attract deposits due to the maturity of large-scale time deposits, while MMF and money trusts saw a reinflow of corporate funds that had been withdrawn for end-of-quarter financial ratio management, alongside an influx of investment standby funds.
On the other hand, other currency products decreased by 900 billion won. Although foreign currency deposits increased due to the inflow of export proceeds, the decrease was offset by the declining revenue from CMA.
A Bank of Korea official explained, "With the poor third-quarter corporate earnings announced at the end of September and the forecast of uncertainty in the export market, the uncertainty in the stock and bond markets increased, leading to an expansion in currency supply centered on investment standby funds."
By economic entity, households and non-profit organizations increased by 5.7 trillion won, corporations by 7.3 trillion won, and other financial institutions by 21.7 trillion won, while other sectors decreased by 1.8 trillion won.
The average balance of narrow money (M1, seasonally adjusted) in October was 1,233.5 trillion won, marking a 0.7% increase compared to the previous month, focusing on savings deposits such as passbook accounts.