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…