SEOUL: South Korea’s pension fund and central bank have agreed to expand their foreign exchange swap line and extend it for another year until the end of 2025, a move that comes as the won has fallen to its lowest level in 15 years.

The swap line, which allows the National Pension Service (NPS) to borrow against the central bank’s foreign exchange reserves for overseas investments, will be expanded to $65 billion from the current $50 billion, it said. the Bank of Korea on Thursday.

The program, seen as a market stabilization tool, was first introduced in September 2022 and has since been expanded several times.

“This should help stabilize the foreign exchange market by absorbing the pension fund’s demand to buy dollars in the spot market,” the BOK said.

The NPS will also maintain its strategic foreign exchange hedging ratio at a maximum of 10 percent until the end of next year, said the Ministry of Social Protection, which oversees the fund’s investment policies, after a policy review meeting.