Group 1 - The Korean National Pension Service (NPS) will play a larger role in ensuring currency stability as South Korea addresses the weakening of the Korean won [1][2] - The NPS management committee announced plans to adopt a more flexible hedging strategy, although details were not specified [1][2] - The NPS will extend its $65 billion foreign exchange swap agreement with the Bank of Korea for an additional year, until the end of 2026 [1][2] Group 2 - The Korean won has depreciated by 8% in the second half of this year due to ongoing capital outflows from the stock market and overseas investments [1][2] - As the largest institutional investor in South Korea, the NPS holds approximately $542 billion in overseas assets and frequently employs hedging and foreign exchange operations to mitigate pressure on the won [1][2] - The NPS's large trading scale significantly impacts the market, and the new measures are expected to alleviate recent imbalances in domestic and foreign exchange supply and demand [1][2] Group 3 - The more flexible hedging policy allows the NPS greater maneuverability to support the won [1][2] - The NPS has set a cap of approximately 15% on the combined ratio of strategic and tactical hedging relative to its global assets [1][2] - Various methods, including selling dollar forwards, will be utilized to achieve this hedging goal [1][2]

Core Viewpoint - Analysts suggest that if the Korean won falls to the significant psychological level of 1500 against the US dollar, the South Korean authorities may intensify efforts to defend the currency [1][4]. Group 1: Currency and Economic Pressure - The Korean National Pension Service (NPS) has recently begun selling dollars to support the won, and it is expected to be more active around the 1,480-1,500 range [1][4]. - The won has depreciated over 4% this quarter due to continuous capital outflows from the stock market and increased overseas investments by residents, putting pressure on South Korea to defend its currency [1][4]. - The NPS, as the largest institutional investor in South Korea with approximately $545 billion in overseas assets, frequently employs hedging and foreign exchange operations to alleviate pressure on the won [1][4]. Group 2: Market Reactions and Expectations - Recent reports regarding NPS's foreign exchange hedging operations seem to have created a signaling effect in the market, leading to a general belief that authorities will defend the 1,500 level [1][4]. - The NPS has set a hedging ratio limit of around 15% of its global assets and implements various methods, including selling dollar forwards, to manage this [1][4]. - The NPS's tactical hedging plan allows it to hedge up to 5% of its overseas asset exposure during the recent round of dollar selling [1][4]. Group 3: Liquidity and Management Expectations - There is an increasing expectation for authorities to implement certain year-end foreign exchange management measures in the context of thin liquidity [2][5]. - The hedging activities of the NPS may have a notable impact on the market [5].