The money circulating in October exceeded 4,110 trillion won. This represents an increase of nearly 40 trillion won in the currency supply within a month, marking the largest increase in seven months. This phenomenon is interpreted as the result of an increase in "investment-waiting" funds amid growing concerns over poor corporate performance and export market uncertainties.
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) for October increased by 39.7 trillion won (1%) from the previous month, reaching 4,110.4 trillion won. The increase from the previous month was the largest since March (1.7%). M2 has been rebounding since June last year, rising for 17 consecutive months.
M2 is a broad measure of currency that includes cash, demand deposits, and savings deposits on demand (M1), as well as money market funds (MMF), deposits with maturities of less than two years, revenue securities, and repurchase agreements (RP). It generally refers to the amount of currency in circulation.
By product, ▲revenue securities (9.3 trillion won) ▲MMF (7.2 trillion won) ▲time deposits (5.9 trillion won) ▲money trusts (5.2 trillion won) increased compared to the previous month. Time deposits continued to increase as banks made preemptive efforts to attract deposits as large-scale time deposits matured. MMFs and money trusts saw reinflows of corporate funds that were withdrawn for quarterly financial ratio management, along with inflows of investment-waiting funds.
Meanwhile, other currency products decreased by 900 billion won. Other currency products saw an increase in foreign currency deposits due to the inflow of export transaction payments, but shifted to a decrease as CMA profitability declined.
A Bank of Korea official noted, "The major corporate performances for the third quarter reported at the end of September were poor, and uncertainties about the export economy emerged. As a result, the currency supply increased, centered on investment-waiting funds, as stock and bond market uncertainties grew."
By economic agent, ▲household and nonprofit organizations (5.7 trillion won), ▲corporations (7.3 trillion won), and ▲other financial institutions (21.7 trillion won) increased, but ▲other sectors decreased by 1.8 trillion won.
The average balance of narrow currency (M1, seasonally adjusted) in October was 1,233.5 trillion won, marking a 0.7% increase from the previous month, mainly driven by savings deposits on demand.