EMERGING MARKETS-South Korean won rises over 2% on pension fund support; stocks flat

By Rajasik Mukherjee

Dec 24 (Reuters) - South Korea's won surged about 2% on Wednesday, hitting its highest level since November 14, after the country's national pension fund initiated steps to support the currency, while Asian stocks drifted sideways in holiday-thinned trading.

The won KRW=KFTC firmed as much as 2.1% to 1,449.8 per dollar, logging its highest intraday gain since early April, after Reuters reported that the National Pension Service (NPS) was conducting a new round of strategic foreign exchange hedging operations.

Rising overseas investments by the pension fund, retail investors and firms have dragged the won, which is down 8% in the second half of 2025. The finance ministry is rolling out tax measures, among others, to boost inflows.

"Taken together, the series of measures will be able to roll back one-sided market expectations for a weak won to some degree," said Park Sang-hyun, an economist at iM Securities.

The NPS, the world's third-largest pension fund, is seen as a major force weighing on the won this year, and its hedging operations are expected to support the currency.

In Southeast Asia, the Thai baht THB=TH briefly touched the 31 per dollar level, which it had not seen since March 2021. It continued to be driven by traders selling gold in dollars in foreign markets and then selling the U.S. currency for baht.

The baht has surged around 10% this year, undermining the competitiveness of Thailand's exports and tourism sectors, two key drivers of the domestic economy.

Elsewhere, Singapore's dollar SGD= jumped to its highest level since late September, while the Malaysian ringgit MYR= extended gains to touch 4.055 per dollar, its highest point since early March 2021.

The ringgit is the second-best currency of this year with around 10% gain.

"The ringgit's firm profile is underpinned by sustained foreign inflows into Malaysian bonds as investors seek higher-yielding, credible emerging-market assets," analysts at Kenanga Investment Bank said in a note.

The MSCI index of global emerging market currencies .MIEM00000CUS traded at an over one-month high as the dollar gauge =USD stayed on the back foot, after a solid U.S. GDP reading failed to move the dial on the interest rate outlook.

In emerging Asian markets, equity trading volumes stayed well below 30-day averages as market participants avoided big moves during the year-end holiday season.

Indonesian stocks .JKSE shed 0.3%, while Singapore stocks .STI slipped from their all-time high scaled the previous day.

Stocks were, however, on track to log yearly gains, with those in Singapore, Taiwan, and Indonesia gaining more than 20% so far this year.

South Korean equities are on track for a 70% surge in 2025, their best year since 1999, driven by strong investor demand for chipmakers and tech firms amid the global AI boom.

"Key driver (behind) the surge in Korean equities has been the country’s exposure to the global AI-led rally," Gareth Leather, senior Asia economist of Capital Economics said in an earlier note.

"Technology stocks account for around one-half of the KOSPI’s market capitalisation ... and has a significant impact on overall index performance."

HIGHLIGHTS:

Yield on Indonesia's 10-year sovereign bond ID10YT=RR at 6.140%

BOJ debated need to keep raising rates, October meeting minutes show

Gold, silver continue march to record highs