South Korea's NPS and BOK Extend FX Swap to $65 Billion Until December 2025 Amid Won's 15-Year Low

Dec 19, 2024, 05:43 AM

South Korea's National Pension Service (NPS) and the Bank of Korea (BOK) have agreed to extend and expand their foreign exchange swap agreement until December 2025. The new agreement increases the swap limit to $65 billion from the previous $500 billion. This move is aimed at stabilizing the won/dollar exchange rate, as the Korean won recently hit a 15-year low against the US dollar. The NPS will maintain its strategic forex hedging ratio at a maximum of 10% until the end of 2025, as announced by the Ministry of Welfare. The agreement allows the NPS to borrow dollars from the BOK's foreign reserves for overseas investments, which helps in absorbing the pension fund's demand for dollars in the spot market and contributes to foreign exchange market stability.