South Korea Extends $35 Billion FX Swap Deal with National Pension Service

SEOUL - South Korea's foreign currency authorities have reached an agreement to extend their $35 billion currency swap arrangement with the National Pension Service (NPS) for an additional year, until the end of 2024. This extension underscores the ongoing efforts to stabilize the market and manage currency risks.

According to Yonhap News Agency, The initial agreement to establish the currency swap line was made in April as a strategic measure to mitigate market volatility. According to the terms set by the authorities, the arrangement allows the NPS to borrow up to $35 billion from the Bank of Korea's foreign reserves in exchange for its local currency holdings.

The primary objective of this deal is to moderate the demand for dollars in the spot market by the NPS, which arises due to its overseas investments. By doing so, the agreement aims to reduce the extreme fluctuations in foreign exchange rates, thereby contributing to market stability.

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