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SK Hynix IncSouth Korea's pension fund halts currency hedging as won hits 2-year high
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South Korea's National Pension Service (NPS), the country's public pension fund, has stopped its foreign exchange hedging operations, market sources told Reuters on Thursday. The move comes as the won rose to its highest level in about two years. NPS, the world's third-largest public pension fund and a major player in domestic financial markets, had this year raised its hedging limit and flexibly conducted currency hedging to support authorities' efforts to curb the won's weakness. NPS's hedging operations effectively increase the supply of dollars in the domestic foreign exchange market. A source, speaking on condition of anonymity, said, "NPS's currency hedging has been halted. There seems to be dollar buying demand today." Another market source noted that the pension fund's dollar purchases could occur in both regular trading and "market average rate" trading. NPS declined to comment on its foreign exchange policy. The decision comes amid growing concerns about one-way market moves following the won's sharp rebound. Foreign exchange authorities recently bought about $20 billion of dollars sold by semiconductor maker SK Hynix after its U.S. stock listing. In trading on Thursday, the won rose as much as 1.15% against the dollar to 1,334.7 won per dollar, the highest since October 4, 2024, but later pared gains and was trading at 1,346.2 won as of 0321 GMT (12:21 p.m. Japan time). The won has gained 16% against the dollar this quarter, reversing a four-quarter losing streak that had taken it to a 17-year low. NPS's assets under management stood at 1,865.6 trillion won ($1.39 trillion) as of end-June, with overseas assets accounting for 54% of the total.
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