Cynthia Kim
SEOUL (Reuters) – South Korea’s monetary authority on Friday said it had agreed with the National Pension Service to expand the currency swap line to $50 billion from the current $35 billion to protect falling gains against the dollar.
“The Monetary Authority believes that a currency swap with the National Pension Service can help mitigate supply and demand imbalances in the foreign exchange market by absorbing the National Pension Service’s spot demand to purchase dollars when the foreign exchange market is volatile,” the Treasury Department said. the statement says.
The move is seen as an indirect intervention in the spot market for dollar winnings, as the swap line allows the fund to borrow from the central bank’s foreign exchange reserves instead of buying dollars in the domestic foreign exchange market.
On Friday morning, the won fell to 1,393.0 per dollar, its weakest level since April 16 and approaching the key resistance level of 1,400, which is being closely watched by market participants.