The money supply in South Korea grew more than 7 percent on-year in August due to increased deposits by households and companies, the central bank said Wednesday.

The nation's "M2" totaled 2,377 trillion won ($2.1 trillion) in August, up 7.2 percent from a year earlier, according to the Bank of Korea. It marks a 1.2 percent rise from July.

The BOK attributed the increase in money supply to a rise in deposits, short-term money in trusts and money market funds.

As of the end of August, the amount in demand deposit accounts rose 3.9 trillion won from a month earlier, while money held in money market funds increased 4.4 trillion won over the cited period.

M2 is a measure of the money supply counting the currency in circulation, including bank debentures and deposits with a maturity of less than two years, along with stock investments. It's a key economic indicator closely monitored by the authorities.

The data came a day before the central bank is set to hold a monthly rate-review session. Analysts said they expect the Bank of Korea to hold the key rate steady at a record low 1.25 percent for October.

Meanwhile, the country's liquidity aggregate, the widest measure of the money supply, grew 7.7 percent in August from a year earlier.

The liquidity aggregate, the broadest measure of the nation's money supply, covers currency in circulation, all types of deposits at financial institutions and state and corporate bonds. (Yonhap)