South Korea’s trillion-dollar pension fund pauses foreign exchange hedging as won strengthens

South Korea’s National Pension Service, the world’s third-largest public pension fund with roughly $1 trillion in assets under management, has stopped its foreign exchange hedging operations. The move comes as the Korean won has strengthened significantly against the dollar, reducing the fund’s perceived need to protect against currency risk on its massive overseas portfolio. What the NPS actually changed The pension fund’s hedging strategy works on a trigger system. When the won-dollar exchange rate dropped from above 1,450 to below the mid-1,300s, the NPS effectively waived its hedging requirements. In plain terms: the won got strong enough that the fund no longer felt compelled to sell dollars or enter forward contracts to offset currency exposure on its international investments. The NPS had recently bumped its strategic hedging ratio from a prior cap of 10% up to 15%. That ratio represents the share of overseas assets the fund actively hedges against currency swings. In April 2026, the fund formalized a restructured hedging policy designed to give it more flexibility in how and when it executes that 15% baseline. To execute its hedging, the NPS typically uses dollar forwards o...