Korea’s National Pension Service and the country’s central bank have agreed to increase the size of their currency swap arrangement by US$15 billion and extend it through next year, a move that may help stem the won’s decline against the US dollar.
The swap line will be raised to US$65 billion from $50 billion and extended by a year to the end of 2025, the NPS, which has invested more than half of its assets overseas, says in a statement on December 19.
The US dollar has gained more than 12% against the won this year. On December 20, it cost 1,451 won to buy one US dollar compared to 1,293 won in January.
“It [the swap line] is expected to contribute to the stabilising of the foreign exchange market,” according to the NPS, the world’s third largest pension fund.
Some 55% of the pension giant’s $791 billion of assets under management as of end-September were in foreign assets.
The NPS’ foreign equity and bond investments far outperformed its domestic investments in the first nine months of 2024.
It earned a return of 21.35% from foreign equities compared to just 0.46% for Korean equites, and 6.97% from foreign bonds versus 4.09% for domestic debt.
