South Korea's money supply grew for the third straight month in June on increased deposits amid rising interest rates, central bank data showed Thursday.

The country's M2, a key gauge of the money supply, stood at 3,709.3 trillion won ($2.85 trillion) on average in June, up 12 trillion won, or 0.3 percent, from the previous month, according to the preliminary data from the Bank of Korea (BOK).

The money supply rose for the third straight month in June after posting the first contraction since September 2018 in March.

M2 is a measure of the money supply that counts cash, demand deposits and other easily convertible financial instruments.

The June increase mainly resulted from a rise in deposits amid rising interest rates in line with the BOK's recent monetary tightening.

Time deposits expanded 22.5 trillion won on-month in June, while money market funds fell 10.2 trillion over the same period, the data showed.

In July, the BOK raised the policy rate by 0.5 percentage point to 2.25 percent, the steepest and sixth increase in borrowing costs since August last year, as it strives to tame inflation. (Yonhap)