South Korea’s state-run pension fund is conducting strategic foreign exchange hedging operations, two sources with direct knowledge of the matter told Reuters on Tuesday, as the won hovers at 17-year lows.
“The National Pension Service (NPS) is using recent high foreign exchange rates as an opportunity for hedging,” one of the sources said.
The NPS, the world’s third-largest public pension fund with 1,458 trillion won ($973.04 billion) of assets, is a major market participant in the domestic currency market.
Its dollar demand for overseas investments is often cited by policymakers and analysts as a source of pressure on the local currency.
The won KRW= reversed course against the dollar after the Reuters’ report to trade down 0.65% at 1,496.4 as of 0537 GMT, compared with a session low of 1,503.1.
On Monday, the currency hit its weakest level since March 2009 at 1,518.4 per dollar amid heightened volatility sparked by the geopolitical conflict in the Middle East.
Last month, the welfare ministry, in charge of overseeing the pension fund’s investment strategies, said it was holding talks with foreign exchange authorities on a regular basis to revise investment schemes to mitigate the market impact.
($1 = 1,498.4000 won)
Reuters
