South Korea’s National Pension Service, the world’s third-largest public pension fund with approximately $1 trillion in assets under management, has suspended its foreign exchange hedging operations. This decision follows the significant strengthening of the won against the dollar, with the exchange rate moving from above 1,450 to below 1,350. The fund had recently increased its strategic hedging ratio from 10% to 15% of its foreign assets, which represent approximately $530 billion in international holdings. This hedging suspension, which reduced dollar supply in the onshore market, could increase net dollar demand. Hedging is expected to resume if the won-dollar exchange rate rises above 1,550.
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