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S Korea enlists its pension fund to defend weak won

SEOUL : South Korean authorities are exploring ways to divert some the domestic pension fund’s foreign currency needs as they try to put a floor under a rapidly weakening won.

The country’s central bank is reviewing a currency swap with the National Pension Service to sate the fund’s dollar needs, to complement its intervention efforts in the currency markets.

The world’s third-largest pension fund is expected to announce some details, including adjustments to its FX management rules, later on Friday, a day after the Bank of Korea Governor Rhee Chang-yong said a currency swap between the two parties is in discussion.

Talks of the dollar-for-won swap come as South Korea’s won weakens through the psychological level of 1,400 per dollar this week for the first time since 2009, marking a 17 per cent decline for the year and becoming one of the worst-hit emerging market currencies against a surging U.S. dollar.

The arrangement would…

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