The average balance of money market funds (MMFs), where cash is parked for stock investments in March, was 1.91548 trillion won, up 6.9% (1.24 trillion won) from the previous month, the Bank of Korea said on the 13th. It is the highest since January 2023, when it climbed 1.34 trillion won (9.4%). As the domestic KOSPI index has set a record high for consecutive days and the market has been strong, investment demand has expanded.
Broad money (M2), meaning a wide definition of currency including MMFs, rose 0.4% (1.85 trillion won) from the previous month to 4,132.1 trillion won. It increased far more than February's gain (200 billion won) and exceeded last year's monthly average increase (14.2 trillion won). The M2 growth rate widened to 0.8% in January, slowed to 0% in February, and has started to rise again.
Narrow money (M1), which combines payroll accounts (transferable savings deposits) and demand deposits with free withdrawals, was 1,368.7 trillion won, up 0.7% from the previous month.
On a year-over-year growth rate basis, M2 increased 5.6%, marking a record high since March 2023. M1 rose 7.9%, the highest since June 2022. A Bank of Korea official said, "Corporations' dividends have increased compared with the past, which also had an impact."
Financial institution liquidity, meaning long-term financial products of two years or more, increased 0.5% month over month to an average balance of 6,194.1 trillion won. Broad liquidity, which aggregates all money supply, was 7,820.5 trillion won on an end-of-month basis, down 0.4% from the end of the previous month.