South Korea’s national pension fund service has proposed a plan to the government to secure U.S. dollars from abraod to be used for overseas investments, its chief said Tuesday, raising hopes for the stabilization of the local currency market.
“The National Pension Service has proposed a plan to the government to raise U.S. dollars for overseas investment from abroad instead of from the local foreign exchange market,” NPS chairman Jun Kwang-woo told the Yonhap News Agency during a telephone interview. Currently, the pension fund secures greenbacks domestically.
Jun said working-level talks with the finance and health ministry have begun, adding he expects the government to welcome the move.
The NPS chairman’s remarks come at a time when the assets of the world’s fourth-largest pension fund are growing. The pension fund’s assets totaled 337 trillion won ($298 billion) at the end of September.
“NPS assets are expected to reach 1,000 trillion won in 10 years. If the fund’s overseas investments increase to 30 percent of its total investments, it will near the size of the country’s foreign exchange reserves,” Jun said.
If the NPS continues to secure U.S. dollars from the local market, its impact on the foreign exchange market is also set to grow as overseas investments rise, he said.
Jun said raising investment funds from abroad is likely to help the NPS secure U.S. dollar funding at lower costs, thanks to its high credit rating, as well as provide a safety net for the local foreign exchange market.
“If a policy is set up to bring some of the funds raised abroad into South Korea, it may help stabilize the local foreign exchange market in times of crises,” Jun said.
