By Kang Seung-woo
Korea’s national pension fund is considering buying U.S. dollars overseas to use in its global investments. In an interview Tuesday, National Pension Fund (NPS) Chairman Jun Kwan-woo said that raising the funds internationally will be more cost effective and also help stabilize the risk-sensitive local currency market. Currently, the pension fund secures greenbacks domestically.
``We have proposed a plan to the government over the possibility of buying U.S dollars from abroad, instead of from the local foreign exchange market, for our overseas investments. Working-level discussions are underway with the Ministry of Strategy and Finance and the Ministry of Health and Welfare, and although nothing has been decided yet, I think the government will agree in principle,’’ said Jun, stressing that the country needs to locate more financing sources from abroad.
“The NPS’ assets will reach 500 trillion won within four or five years and eventually 1 quadrillion won in a decade. If the fund’s overseas investment increase to 30 percent of its total investments, it will nearly match the size of the country’s foreign exchange reserves.’’
Currently, the NPS’ assets stand at 337 trillion won as of the end of third quarter. Korea’s foreign currency holdings reached $308.63 billion at the end of November, the eighth-largest in the world.
Jun also said that if the NPS is allowed to get dollars overseas this will contribute to stabilizing the local currency market in times of crises because it can finance funding at lower costs thanks to its high credit rating.