South Korea's Pension Fund Lists Dollar for Sale in FOREX Markets

South Korea's pension fund has been selling dollars in the onshore foreign exchange market in recent weeks, capping losses in the won currency as the dollar surges, two sources with knowledge of the matter told sources. The National Pension Service (NPS), the world's third-largest public pension fund with more than $810 billion in assets, is a major mover of domestic financial markets.

"The pension fund is selling dollars in the spot market lately," one source said. "It is seen related to tactical FX hedging or portfolio rebalancing."

Another source said the dollar selling this month was likely for portfolio rebalancing purposes.

"The pension fund has to sell if the ratio of foreign assets surpasses the target," the person said. The NPS sold "quite an amount" of dollars, they added, without providing further detail.

The two sources asked not to be identified due to sensitivity of the matter. The NPS, which typically does not reveal its market-moving investment strategies, declined to comment. The pension fund had until recently been a source of downward pressure on the won for years as it boosted its overseas investments, with estimated outflows of $2-3 billion each month.

Its dollar selling comes as the won currency is trading around the psychological threshold of 1,400 per dollar, breaching that level earlier this month for the first time in two years. The dollar has gained strongly across the board since Donald Trump's victory in the U.S. presidential election. The won, last quoted 1,396.1 per dollar, has weakened 8 per cent so far in 2024, extending losses for the fourth consecutive year.