South Korea vows measures to stem won’s decline

South Korea vows measures to stem won's decline
A South Korea won note is seen in this illustration photo on May 31, 2017. (File photo: Reuters/Thomas White)

SEOUL: South Korea’s finance minister vowed on Thursday (Sep 22) to introduce measures to ease downward pressure on the won currency while local media reported the central bank and the national pension fund could form a currency swap.

“The authorities will introduce various measures aimed at easing a supply-demand imbalance for foreign currencies from the pension fund and foreign trading companies,” Minister Choo Kyung-ho said at a meeting of senior officials.

He did not elaborate, while local media reported late on Wednesday the central bank and national pension fund were considering forming a currency swap so that the pension fund can meet some of its dollar demand without buying in the market.

The won has lost 15 per cent of its value against the dollar this year, making it one of the worst performers among its peers.

Both the Bank of Korea and the National Pension Service declined to comment on the reports.

Citing a Bank of Korea source, online news provider Yonhap Infomax reported that the arrangement was among the issues to be discussed at a scheduled meeting of the pension service’s governing panel on Friday.

The won has been pressured by the rallying dollar and dollar demand both from importers and the national pension fund. The falling won has exacerbated already high inflation and increases the cost of covering debt obligations owed to overseas lenders.

Source: Reuters/rj