South Korea’s Pension Fund Intervenes to Stabilize the Won

South Korea is increasingly relying on its National Pension Service (NPS) to bolster the weakening won, which has fallen to its lowest level against the dollar in 15 years. This move highlights the limited options available to the government as conventional intervention methods have proven insufficient.

NPS Steps In Amidst Currency Weakness

The National Pension Service, the world’s third-largest public pension fund with approximately $973.04 billion in assets (as of March 24, 2026) [1], is undertaking strategic currency hedging to alleviate pressure on the won. Sources indicate the fund is actively selling dollars as part of this program, having a noticeable impact on the onshore won market. [2]

Adapting the Hedging Framework

Authorities are adjusting the hedging framework to provide the NPS with greater flexibility, enabling a quicker response to fluctuating market conditions. [2] This increased responsiveness is crucial given the won’s sustained weakness, currently at levels not seen since March 2009. [3]

Concerns Over Sustainability

Despite the immediate impact of the NPS’s interventions, concerns remain regarding the long-term sustainability of using a pension fund as a continuous currency buffer. Ongoing structural pressures contributing to dollar demand in Korea pose a significant challenge. [2]

Potential for U.S. Scrutiny

The expanding role of the NPS in stabilizing the won could attract scrutiny from the United States, potentially leading to Korea being designated as a currency-monitoring country for a prolonged period. [4] Measures taken by Korea to stabilize the foreign exchange market, including NPS involvement and pressure on exporters to convert dollar earnings, could be interpreted as currency manipulation. [4]

Key Takeaways

• The South Korean won is at a 15-year low against the dollar.
• The National Pension Service (NPS) is actively intervening through strategic currency hedging.
• Authorities are increasing the NPS’s flexibility to respond to market changes.
• Concerns exist about the long-term viability of relying on the NPS for currency stabilization.
• Increased NPS intervention could lead to greater scrutiny from the United States.