Bank of Korea-Kookmin Pension Agree to Implement $10 Billion Currency Swap (Update)

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] The foreign exchange authorities (Bank of Korea and Ministry of Economy and Finance) announced on the 23rd that they have agreed to conduct a currency swap with the National Pension Service within a limit of 10 billion dollars.

Accordingly, the National Pension Service will be able to procure foreign currency funds necessary for overseas investment through foreign exchange swap transactions with the foreign exchange authorities.

The National Pension Service can secure overseas investment funds stably without counterparty risk, and it is expected to contribute to stabilizing supply and demand in the foreign exchange market as the demand for spot foreign exchange purchases by the National Pension Service is alleviated.

The maturity for each transaction is 6 months or 12 months (without maturity extension) and will be conducted within the 10 billion dollar limit until the end of this year.

The foreign exchange authorities stated, "Although foreign exchange reserves will decrease during the contract period due to the transaction, the entire amount will be restored at maturity, so the decrease in foreign exchange reserves is temporary," and added, "We plan to start the transaction promptly once the remaining procedures, such as signing the contract with the National Pension Service, are completed."