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Korea's M2 money supply inches down in Dec.

South Korea's M2 money supply shrank slightly from a month earlier in December, marking the first on-month drop in over a year, central bank data showed Monday.

The M2 came to 2,241.8 trillion won ($1.85 trillion won) last month, down 0.1 percent from revised 2,244.3 trillion won the previous month, according to preliminary data from the Bank of Korea.


The December tally marked a 7.5 percent increase from a year earlier.

The M2 refers to currency in circulation, including bank debentures and deposits, with a maturity of less than two years, along with stock investments. It does not cover government or corporate bonds.

The M2 had been on a steady rise since at least November 2014 after the central bank began slashing its key rate in August the same year to help bolster spending and growth in Asia's fourth-largest economy.

The slight decline in December was apparently caused by a U.S. rate hike in the same month that marked the first of its kind in nearly a decade.

Consumer sentiment here quickly froze while foreign investors began pulling out of the local market in a near exodus.

The consumer sentiment index dipped to a 4-month low of 103 in December, losing 3 points from the previous month.

Foreign investors remained net sellers of South Korean shares for 37 consecutive sessions since Dec. 2, the longest selling streak in the country's history.

Amid continued jitters in the local stock market, people apparently sought safer investment opportunities.

In December, fixed bank deposits with a maturity of less than two years gained 5.5 trillion won with short-term deposits also adding 1.8 trillion won from the previous month.

On the other hand, the amount invested in money market funds, or short-term debt securities, dropped 5.1 trillion won from a month earlier. (Yonhap)

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