FX.co ★ South Korean Won Gains on NPS, BOK Support

The South Korean won appreciated by 1.0% to approximately 1,465 per dollar on Wednesday, marking a significant rebound from multi-month lows and reaching its strongest position in nearly a month. This upswing was primarily driven by the National Pension Service's strategic foreign exchange hedging initiatives. As the third-largest pension fund globally, the NPS, in coordination with foreign exchange authorities, has been strategically adjusting overseas investment flows to alleviate the currency's downward pressure. Supporting these efforts, the Bank of Korea renewed a $65 billion currency swap agreement with the NPS and is providing interest on financial firms' reserve deposits to counterbalance temporary losses incurred from the hedging activities. Market observers noted that these measures have effectively limited the upward pressure on dollar-won exchange rates amid persistent volatility. Nonetheless, analysts have warned that structural challenges persist, such as ongoing overseas investments and the pursuit of higher returns abroad, which continue to constrain the won, making it vulnerable to shifts in global risk sentiment and domestic capital outflows.