The move comes as the won has slid nearly 8% in the second half of the year, making it Asia’s worst-performing currency amid concerns about capital outflows and trade uncertainty. NPS had conducted such strategic hedges between January and May this year.
The won rose sharply after the news, erasing an earlier loss of as much as 0.2% against the dollar.
A spokesperson for the National Pension Service declined to comment.
NPS’s maximum hedge ratio is around 15%, or roughly US$81.3 billion. The fund employs two hedging strategies, with its tactical FX hedge adjustable within a 5% range of its overseas portfolio — allowing for as much as US$27.1 billion in tactical positions.
See also: BofA joins Goldman Sachs to boost yuan forecast
Traders expect the fund to initiate its hedging strategy when the won moves to an extreme level relative to its long-term average, estimated at around 1,475–1,485 per dollar. On Monday (Dec 8), the won closed at 1,469.40 per dollar.
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