Growth of S. Korea's short-term funds hits 7-year high in Sept.

SEOUL, Nov. 11 (Yonhap) -- South Korea's short-term funds grew at the fastest
clip in over seven years in September as investors were unable to find adequate
long-term investment vehicles, the central bank said Wednesday.
The country's M1, the narrowest gauge of money supply, reached 367.1 trillion won
(US$316.6 billion) in September, up 19.5 percent from the previous year,
according to the Bank of Korea (BOK). September's growth accelerated from an
annual 18.5 percent gain in August and marked the steepest expansion since August
2002 when M1 jumped 20.3 percent.
M1 covers currency in circulation, demand deposits and savings at money market
deposit accounts.
"A jump in M1 means that people still continued to manage money on a short-term
basis," said Kim Hwa-yong, a BOK official.
Meanwhile, the country's M2, a narrower measure of its money supply, expanded 10
percent in September, the same pace seen in August.
M2 covers currency in circulation and all types of deposits with maturity less
than two years at lenders and non-banking financial institutions, excluding those
at insurers and brokerage houses.
The BOK said in a separate statement that M2 is estimated to have grown around 10
percent in October as the nation's current account remained in the black and
stock investment by foreign investors rose, it added.
The country's liquidity aggregate, the widest measure of the money supply, grew
10.3 percent in September from a year earlier mainly because of increased sales
of government bonds, it added.
The BOK said in a separate statement that M2 is estimated to have grown around 10
percent in October as the nation's current account remained in the black and
stock investment by foreign investors rose, it added.
The data comes a day before the BOK makes its monthly interest-rate decision. The
BOK is widely forecast to freeze the benchmark seven-day repo rate at a record
low of 2 percent for the ninth consecutive month. It lowered the rate by a total
of 3.25 percentage points between October 2008 and February in a bid to put the
brakes on a sharp economic free-fall.
sooyeon@yna.co.kr
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