South Korea's money supply grew in April as rising interest rates led to an increase in deposits, central bank data showed Wednesday.

The country's M2, a key gauge of the money supply, stood at 3,667.1 trillion won ($2.84 trillion) on average in April, up 8.5 trillion won, or 0.2 percent from a month earlier, according to the preliminary data from the Bank of Korea (BOK).

The rise followed a 0.1 percent on-month decline in March, which marked the first contraction since September 2018.

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

April's increase stemmed in part from a rise in deposits amid rising interest rates in line with the central bank's recent monetary tightening.

Last month, the BOK hiked its policy rate by a quarter percentage point to 1.75 percent, the fifth increase in borrowing costs since August last year.

Demand deposits expanded 7.6 trillion won on-month, while time deposits grew 4.2 trillion won over the same period, the data showed.

Compared with a year earlier, the M2 expanded 9.4 percent but the growth slowed from the previous month's 10.8 percent rise. (Yonhap)