(adds foreign exchange official, dealer comments)
By Yena Park and Jihoon Lee
SEOUL, March 9 (Reuters) - South Korea's finance
minister said on Thursday foreign exchange authorities were in
talks to reactivate market stabilizing measures, including a
foreign exchange swap programme between the pension fund and
central bank.
"The measures we took in the fourth quarter to stabilize the
foreign exchange market will continue in a consistent manner,"
Minister Choo Kyung-ho told reporters, according to a media pool
report.
Choo said the Korean won's recent movements were
largely in line with other major currencies and that the
authorities would continue to monitor the market.
A finance ministry official separately said the authorities
would arrange a new currency swap line between the pension fund
and central bank in the near future, including maturity
extension for the swap deals made during the last programme.
The swap programme, in place for a maximum $10 billion
during the final three months of last year, allowed the pension
fund to use the central bank's foreign reserves for overseas
investments when there was increased volatility in the foreign
exchange market.
Another official said the new arrangement will be of "enough
amount" to ease dollar demand in the onshore market, without
providing a specific figure or time frame.
"The currency swap programme will cap the upside for the
dollar/won exchange rate, if not drag it lower," a local
currency dealer said.
Earlier this week, U.S. Federal Reserve Chair Jerome Powell
said the central bank will likely need to raise interest rates
more than expected and is prepared to move in larger steps,
lifting the dollar.
The discussion comes less than a week after the chairman of
the National Pension Service told Reuters it would collaborate
with foreign exchange authorities when needed to help stabilize
the market, such as by re-establishing the swap line.
(Reporting by Jihoon Lee and Yena Park; Editing by Muralikumar
Anantharaman and Bernadette Baum)
