Why Korean Pension Fund’s New Hedging Policy Supports Won

South Korea’s largest pension fund removed its cap on currency hedging last month, allowing it to exercise more heft in the foreign exchange market at a time of won weakness.

The National Pension Service, which manages about 1,610.4 trillion won ($1.08 trillion), said in April that a 15% ceiling on forex hedging for its foreign investments is now a baseline. The change lets it smooth out volatility in the currency market caused by its capital outflow.