SK Hynix’s listing boosts South Korea’s plan to repatriate U.S. dollars
SK Hynix's U.S. listing set a record for fundraising, and the South Korean won rebounded sharply. As a result, South Korean regulatory authorities gained new impetus to encourage major export companies to repatriate overseas U.S. dollar funds. The chip maker raised US$26.5 billion through this listing, and the market observed that it continued to sell off the US dollar, directly laying the foundation for the subsequent strength of the South Korean won. At a work conference held last week, South Korea's Deputy Finance Minister Hu Chang called on exporters to convert a larger proportion of overseas revenue into Korean won and recover funds that have been stranded abroad for a long time. Hynix's large-scale foreign exchange settlement fully proves that the capital operation of a single company can change the trend of the foreign exchange market. This also strengthened the thinking of South Korean regulators: to work with the country's leading export companies to stabilize the exchange rate for several months, rather than relying solely on foreign exchange reserves for direct intervention. The core logic of this strategy is that the effect of independent foreign exchange settlement by enterprises is better than the costly official direct market intervention. Stephen Lee, an economist at Merrill Lynch in Seoul, said: "The U.S. dollar selling wave started by SK Hynix has formed a chain amplification effect. In addition to Hynix's foreign exchange settlement due to its American depositary receipts fundraising, the continued strength of the Korean won also prompted other companies that had previously delayed the conversion of foreign currency revenue to follow up and sell U.S. dollars." The South Korean won rebounded about 6% against the U.S. dollar in July despite foreign investors selling stocks. The South Korean won became Asia's best-performing currency this month, after being the region's worst-performing currency in the first half of the year.