FX authorities extend $65bn swap with NPS

Dec 16, 2025, 08:27 am

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/ Source: Yonhap News

South Korea’s foreign exchange authorities have agreed to extend a foreign exchange swap arrangement with the National Pension Service (NPS) through the end of next year, a move expected to help stabilize markets amid recent volatility in the won-dollar exchange rate.

The Ministry of Economy and Finance and the Bank of Korea said on December 15 that they had reached an agreement with the NPS to maintain the FX swap deal with a ceiling of $65 billion until the end of 2026. The FX swap between the authorities and the NPS was first launched in September 2022 with a $10 billion limit, expanded to $35 billion in April 2023, raised to $50 billion in June 2024, and further increased to $65 billion in December that year.

Officials said the arrangement is expected to contribute to market stability by absorbing the NPS’s demand for spot dollar purchases during periods of foreign exchange market stress.

A finance ministry official noted that while foreign exchange reserves decline by the amount of the swap during the transaction period, the funds are fully returned at maturity, meaning the reduction in reserves is only temporary.

The NPS also assessed the extension as positive for fund management. In times of sharp rises in the won-dollar exchange rate, currency hedging through the FX swap can help mitigate exchange-rate volatility risks associated with overseas investments, thereby supporting fund returns.

#foreign exchange swap #National Pension Service #FX market stability #won-dollar exchange rate