Foreign Exchange Authorities Increase Currency Swap with National Pension Service to $50 Billion

The foreign exchange authorities (Bank of Korea, Ministry of Economy and Finance) announced on the 21st that they have agreed to increase the foreign exchange swap (FX Swap) transaction limit with the National Pension Service from the existing $35 billion to $50 billion until the end of 2024.

This measure is intended to strengthen the response capacity of the two institutions (foreign exchange authorities and National Pension Service), considering their effective experience in responding to increased volatility in the foreign exchange market through FX swap transactions and the continued overseas investments by the National Pension Service.

The foreign exchange authorities emphasized that the FX swaps with the National Pension Service can absorb the National Pension Service's demand for spot foreign exchange purchases during foreign exchange market instability, thereby contributing to alleviating supply and demand imbalances in the foreign exchange market.

The National Pension Service also explained that it can mitigate exchange rate fluctuation risks associated with overseas investments and improve the efficiency of foreign currency fund management. A foreign exchange authority official stated, "Although foreign exchange reserves decrease by the transaction amount during the swap transaction period, the funds are fully restored at maturity, so the reduction in foreign exchange reserves is temporary."

This content was produced with the assistance of AI translation services.