By Cynthia Kim
SEOUL (Reuters) – South Korea’s foreign exchange authorities said on Friday they have agreed with the National Pension Service to expand a currency swap line to $50 billion from the current $35 billion, to stem declining profits from defend the dollar.
“The currency authorities believe that the FX swap with the National Pension Service can help alleviate the supply-demand imbalance in the foreign exchange market by absorbing the demand for cash dollars from the National Pension Service when the foreign exchange market is unstable is,” said the Ministry of Finance. said in a statement.
The move is seen as an indirect intervention in the spot market for won dollars, 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.
The won fell to 1,393.0 per dollar early on Friday, its weakest level since April 16 and nearing a key resistance level of 1,400 closely watched by market participants.
