South Korea's National Pension Service said it will adopt flexible methods for foreign exchange hedging in response to market conditions. According to a statement issued on Monday, the fund's management committee said it has “decided to develop flexible implementation measures that allow strategic hedging to be carried out adaptively according to market conditions.” The fund currently has a hedging cap of 10% of overseas assets. The reason behind this move is that demand for the US dollar in South Korea surged, mainly driven by national pensions and retail investors' portfolio investments, and the depreciation rate of the Korean won accelerated dramatically in the second half of this year. During this period, the exchange rate of the won against the US dollar fell by more than 8%, making it the worst performing currency in Asia. South Korea's Ministry of Health and Welfare, which is responsible for supervising the national pension, said in a statement that the committee also announced that the foreign exchange agreement with the Bank of Korea will be extended by one year until the end of 2026. The Bank of Korea said in another statement that the swap amount has gradually increased from 10 billion US dollars in 2022 to 65 billion US dollars. The won rose against the US dollar after the announcement. USD/KRW once fell 1% to 1,463.65 per dollar, which was around 1,472 before the announcement.

South Korea's National Pension Service said it will adopt flexible methods for foreign exchange hedging in response to market conditions. According to a statement issued on Monday, the fund's management committee said it has “decided to develop flexible implementation measures that allow strategic hedging to be carried out adaptively according to market conditions.” The fund currently has a hedging cap of 10% of overseas assets. The reason behind this move is that demand for the US dollar in South Korea surged, mainly driven by national pensions and retail investors' portfolio investments, and the depreciation rate of the Korean won accelerated dramatically in the second half of this year. During this period, the exchange rate of the won against the US dollar fell by more than 8%, making it the worst performing currency in Asia. South Korea's Ministry of Health and Welfare, which is responsible for supervising the national pension, said in a statement that the committee also announced that the foreign exchange agreement with the Bank of Korea will be extended by one year until the end of 2026. The Bank of Korea said in another statement that the swap amount has gradually increased from 10 billion US dollars in 2022 to 65 billion US dollars. The won rose against the US dollar after the announcement. USD/KRW once fell 1% to 1,463.65 per dollar, which was around 1,472 before the announcement.