Lee's plans to strengthen the NPS in the face of currency volatility

The discovery of a government strategy to stabilize South Korea’s pension fund marks a critical moment in the country’s financial policies. Seuran Lee, First Vice Minister of the Ministry of Health and Welfare, revealed that Lee’s plans include issuing foreign currency bonds by the end of 2026, aiming to strengthen the National Pension Service’s (NPS) funding capacity amid strong exchange rate pressures. ## NPS Under Pressure: The Challenge of a Weakening Won The world’s third-largest pension fund faces a challenging reality. Since mid-2025, the South Korean won has depreciated approximately 7% against the dollar, compressing the fund’s returns and complicating its portfolio management strategy. This depreciation forced the NPS to actively intervene in the foreign exchange market, selling dollars to try to curb the won’s decline and prevent further pressure on the country’s monetary stability. The situation worsens considering the $350 billion investment target in American industries under the trade agreement with Washington. The possibility of further capital outflows would act as an additional catalyst for currency weakening, creating a dilemma between domestic economic objectives and international commitments. ## Diversification of Funding as a Strategic Path Lee’s plans to issue foreign currency bonds represent more than a tactical response to the current situation. The measure aims to optimize the fund’s financing structure, reducing dependence on domestic sources and taking advantage of opportunities in external markets. By expanding its fundraising options, the NPS would gain greater flexibility to manage its portfolio and mitigate risks associated with currency fluctuations. This is the first formal acknowledgment by a government official of a dollar bond issuance strategy by the fund, indicating both the urgency and the coordinated nature of the response to market pressures. ## Institutional Coordination Reinforces Commitment In addition to the bond issuance initiative, the Ministry of Health and Welfare, NPS, the Ministry of Finance, and the South Korean central bank will hold their first formal meeting as a quadrilateral advisory body. This coordination mechanism was created to address critical issues of financial market stability, signaling an integrated effort to protect the currency and ensure the solidity of the country’s financial institutions. The convergence of these three pillars—external bond issuance, active exchange rate management, and institutional coordination—reflects Seoul’s determination to turn Lee’s plans into concrete actions capable of restoring balance to South Korea’s financial markets.