Intervention effort – South Korea pension fund selling dollars, buying won in recent weeks

South Korea’s National Pension Service (NPS) has been selling dollars in the onshore foreign exchange market in recent weeks, helping limit losses in the won as the dollar strengthens. Reuters citing according to two sources familiar with the matter.

As the world’s third-largest public pension fund, with assets exceeding $810 billion, the NPS has significant influence on domestic financial markets.

“The pension fund has been actively selling dollars in the spot market recently, likely linked to tactical FX hedging or portfolio rebalancing,” one source explained.

Another source suggested that this month’s dollar sales were primarily driven by the need for portfolio rebalancing. “The fund must sell dollars if the proportion of foreign assets exceeds its target,” the source noted, adding that the NPS sold a substantial amount, though no specific figures were provided.

Both sources spoke anonymously due to the sensitive nature of the information. The NPS, which does not usually disclose its investment strategies, declined to comment.

Until recently, the NPS had been exerting downward pressure on the won for years by increasing its overseas investments, with estimated monthly outflows of $2–3 billion.