S Korea’s central bank, pension fund in talks to expand FX swap

SEOUL : South Korea’s central monetary institution and national pension fund are in discussions to prolong their foreign change swap programme of $35 billion, officers responsible of foreign change said on Friday.

They’re in talks to rob the quantity, however nothing has been made up our minds, one legitimate said.

Yet any other legitimate said discussions enjoy been ongoing since the received became once weakening a month previously to articulate up a measure needed for market stabilisation. Both officers declined to be identified thanks to the sensitivity of the topic.

The Bank of Korea said closing December a market stabilising tool became once needed and that it might possibly possibly presumably perhaps remember rising the quantity of the swap line if major, as it agreed with the Nationwide Pension Provider (NPS) to prolong the programme till the cease of this year.

The NPS declined to relate. The welfare ministry, which oversees the NPS’s funding protection, did no longer enjoy instantaneous relate.

The swap line became once first launched in late 2022 and expanded in early 2023 to mitigate downward stress on the received on account of the NPS’ growing demand for in but any other nation investments. It allowed the pension fund to borrow the central monetary institution’s foreign change reserves barely than attempting to search out bucks in the onshore foreign money market.

In April, the received touched 1,400 per dollar, a 17-month low, against a broadly less assailable U.S. foreign money. It has weakened 6.7 per cent against the dollar thus far this year, extending losses for a fourth consecutive year.