South Korea forms new body to shield pension fund from currency risks
South Korea has established a new consultative body to oversee the impact of foreign exchange rate fluctuations on the National Pension Service (NPS). The group, comprising the NPS and financial authorities, held its inaugural meeting on Monday. Its formation follows recent volatility in the won, which depreciated to 1,479.4 against the dollar on 24 November before rebounding to the 1,450 range by Wednesday.
The consultative body will evaluate how the NPS’s overseas investments influence currency markets. With 44 percent of its 1.32 quadrillion won ($901 billion) portfolio invested in foreign assets, the pension fund’s returns hinge on stable exchange rates. Since its profits are denominated in won, sharp currency swings can directly impact its financial performance.
The won has exhibited signs of recovery after plummeting to a low of 1,479.4 per dollar last month. The consultative body’s work will persist as authorities strive to balance the NPS’s foreign holdings with currency stability. Future meetings will likely discuss strategies to mitigate risks from exchange rate movements on the pension fund’s assets.
