Authorities begin talks on extending currency swap deal with NPS

By Kim Han-joo

SEOUL, Dec. 1 (Yonhap) — South Korea’s foreign currency (FX) authorities said Monday that they have begun discussions on extending their currency-swap arrangement with the state pension operator, the finance ministry said.

As the Korean won continues to weaken against the U.S. dollar, the Ministry of Economy and Finance, the Bank of Korea (BOK), the National Pension Service (NPS), and the Ministry of Health and Welfare overseeing the pension fund formed a joint consultation body last month.

During the latest meeting of the four-way body held Sunday, the authorities began detailed discussions on extending the currency-swap contract, which is set to expire at the end of this year, the finance ministry said.

Under an agreement, the NPS can borrow up to US$65 billion from the BOK’s foreign reserves in exchange for its local-currency holdings.

The currency swap deal was first established in September 2022 with an initial limit of $10 billion. Since then, the limit has been expanded to $50 billion in June 2024 and again to $65 billion in December 2024.