S. Korea's money supply growth registers 9.3 pct in May

16:35, July 08, 2010      

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South Korea's money supply grew 9.3 percent year-on-year in May, keeping its growth pace from a month ago, the central bank said Thursday.

According to a report by the Bank of Korea (BOK), the country posted 1,630.9 trillion won (1.35 trillion U.S. dollars) for its M2, the country's widely-used measure of money supply, as of end- May, up from the previous month's 1,621 trillion won (1.35 trillion U.S. dollars).

Compared to the 9.4 percent on-year growth registered in April, the 9.5 percent gain in May reflected that the nation's liquidity growth is stabilizing compared to the previous year, BOK officials said.

Meanwhile, the nation's M1, a narrower gauge of liquidity, stood at 394.9 trillion won (326.6 billion U.S. dollars) as of end- May, expanding 10.9 percent from a year ago.

The M1 gain also maintained the previous level that registered an annual 10.8 percent in April, also pointing that inflationary pressure is stabilizing.

Based on the liquidity data, which came a day ahead of the nation's monthly rate setting meeting, local analysts are predicting that South Korea will have its key rate frozen in July for the 17th consecutive month.

Despite growing concerns that the central bank should withdraw its monetary expansionary policies in the second half, the central bank has been citing a slower recovery pace and overseas financial jitters as they maintained the rate as the status quo.

The BOK cut the rate by a total of 3.25 percentage points between October 2008 and February 2009 in the midst of the global financial slump.



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