Written by Cynthia Kim
SEOUL (Reuters) – South Korea's foreign exchange authorities said on Friday they had agreed with the National Retirement Authority to expand the currency swap line to $50 billion from the current $35 billion to defend the weakening won against the dollar.
“Foreign exchange authorities believe that foreign exchange swaps with the National Pension Service can serve to mitigate the supply-demand imbalance in the foreign exchange market by accommodating the immediate demand for dollar purchases by the National Pension Service when the currency market is unstable,” the Ministry said. Finance. He said in a statement.
The move is seen as an indirect intervention in the dollar spot market because the swap line allows the fund to borrow from the central bank's foreign exchange reserves instead of buying dollars in the local currency market.
The won fell to 1,393.0 per dollar early Friday, the weakest level since April 16 and approaching the key resistance level of 1,400 that market participants are closely monitoring.