The reversal followed reports that authorities had begun making arrangements for foreign exchange movements tied to SK Hynix Inc.'s American depositary receipt sale.
According to an individual with knowledge of the situation, South Korean officials were preparing for the resulting currency shifts. The chipmaker is expected to begin utilizing forward contracts starting Friday to hedge the currency risk associated with its $29 billion ADR sale, the source added. Although the ADRs are in U.S. dollars, the company has stated its plan to repatriate a portion of the proceeds for domestic investments, thereby requiring it to purchase won.
iM Securities Co. economist Park Sang-hyun remarked: "The government appears to be paying close attention to exchange-rate stability, so I think the company may cooperate by bringing dollars into the country." Park Sang-hyun said, "Still, exactly how much will be converted is ultimately up to SK Hynix." "In terms of size, it's certainly meaningful. The $29 billion figure is equivalent to roughly one month's worth of foreign net selling."
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A spokesperson for Hynix stated, "The company was considering various options but refrained from confirming details."
The won has been under severe pressure this year, depreciating sharply against the dollar as the Federal Reserve's aggressive rate hikes attracted capital outflows from emerging markets. South Korea's central bank has already intervened multiple times to stabilize the currency, and the large foreign selling of Korean equities in June further exacerbated the decline. In this environment, the Hynix ADR proceeds present a rare opportunity for a substantial dollar inflow without direct official action.
The currency's protracted weakness reflects the combined effect of U.S. monetary tightening, global risk aversion, and persistent trade deficits. The Bank of Korea has deployed verbal warnings and direct market operations to curb excessive volatility, but the won has still lost more than 10% against the dollar this year. Against this backdrop, any large-scale dollar conversion by SK Hynix would provide meaningful support, even if only temporary.
SK Hynix is capitalizing on American enthusiasm for high-flying memory-chip shares, and it has also unveiled plans for domestic construction initiatives. An inflow of that magnitude would provide a welcome boost to Korea's struggling won.
The settlement date of July 14 is now a key date for market watchers. Given the won's persistent weakness and the heavy foreign selling in June, the government's involvement in managing the ADR-related currency flows highlights its concern over exchange-rate stability. Whether the Hynix funds will provide lasting support to the won or only a temporary reprieve remains uncertain, with traders closely monitoring any conversion announcements from the chipmaker.
The won's steep slide this year, driven largely by aggressive U.S. monetary tightening and heightened global risk aversion, has stoked fears of imported inflation in South Korea. Authorities have repeatedly flagged their readiness to intervene in currency markets, and the Hynix ADR proceeds now offer a rare opportunity for a large dollar inflow without direct official action.
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