(Recasts with deal announced, details, won strengthening)
By Choonsik Yoo and Yena Park
SEOUL, April 13 (Reuters) - South Korea's central bank
on Thursday agreed a deal with the National Pension Service that
allows the latter to secure up to $35 billion in funds outside
the standard foreign exchange market, a move offering support to
the beleaguered Korean won.
The move comes in the wake of the won weakening
more than 8% versus the dollar in just two months, hit by a
ballooning trade deficit and a fresh wave of risk aversion in
global markets.
The won sharply extended gains against the dollar soon after
the announcement, strengthening as much as 0.66% on the day. It
wasn't immediately clear whether any dollar-selling intervention
by Korean authorities in currency markets had taken place at the
same time.
The Bank of Korea said in a statement that the agreement
with the pension service, similar to a $10 billion swap
arrangement between the two that expired at the end of last
year, would help absorb some of the dollar demand on the onshore
currency market.
In early March, Finance Minister Choo Kyung-ho told
reporters the Bank of Korea and the National Pension Service
could establish a swap agreement, under which the pension
service could secure dollars outside the market.
The world's third-largest pension fund, valued at 917
trillion won ($692.40 billion) at the end of January, needs to
exchange around $1 billion of local currency into dollars each
month for investment abroad.
($1 = 1,324.3700 won)
(Reporting by Choonsik Yoo and Yena Park; Editing by Sandra
Maler, Muralikumar Anantharaman and Sam Holmes)
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