Is the Korean won receiving strong support? Reports suggest that South Korea's foreign exchange authorities are "taking over" the $20 billion repatriation of funds from SK Hynix.

According to informed sources, South Korea's foreign exchange authorities purchased approximately $20 billion in U.S. dollars, which were the funds repatriated to South Korea by SK hynix (SKHY.US) after completing a $26.5 billion American Depositary Receipt (ADR) listing in July. The source indicated that the foreign exchange stabilization fund managed by the South Korean Ministry of Finance and the Bank of Korea acquired these dollars through over-the-counter (OTC) trading, specifically during the period when SK hynix was transferring dollars back to Korea. Although the market has long been aware that this South Korean chipmaker would repatriate U.S. dollars raised on Wall Street, this is the first media report indicating who ultimately purchased most of this repatriated money. This approach differs from the historically adopted methods of foreign exchange intervention by South Korean authorities, and also aims to stabilize foreign exchange market volatility while supplementing the country's foreign exchange reserves. South Korea does not publicly disclose the specific asset composition or current scale of its foreign exchange stabilization fund. This fund is a sovereign wealth pool consisting solely of U.S. dollars and Korean won. The foreign exchange stabilization fund is sized at 135.1 trillion won ($98.7 billion), according to an operational plan confirmed by the National Assembly last year. However, based on the budget proposal released by the South Korean government on Tuesday, the expected size of the fund is approximately 106.5 trillion won. Nevertheless, market participants and macroeconomists have long speculated that the U.S. dollar's share in this fund has significantly decreased in recent months after the Bank of Korea engaged in active and continuous foreign exchange intervention to defend its currency. The Korean won has recently experienced a significant rebound. The exchange rate of the won against the dollar hovered around 1,550 won per dollar at the end of Juneits lowest level in 17 yearsbut has since risen more than 12% over the past two months. As of the time of writing, the dollar-to-won exchange rate stands at 1,363.34. It is noteworthy that the unprecedented shareholder return plans announced by the two major memory chip giants, SK Hynix and Samsung Electronics, are also seen as a key factor influencing the movement of the won. If these companies raise funds in the local currency market to support their shareholder return plans, the won may continue its recent upward momentum. Investors are particularly concerned about how much demand these shareholder return plans from SK Hynix and Samsung Electronics will generate for the won, and ultimately how much capital will flow out of South Korea to overseas shareholders. Hanwha Investment & Securities economist Choi Gyu-ho has stated, These companies must pay shareholder returns in won, and they can either use the won they already hold or sell U.S. dollars in other markets to buy won. Given the substantial amounts involved, they may eventually need to sell more dollars to raise the necessary funds. Although these shareholder return plans initially drove up the value of the won, whether they can sustain this positive momentum remains uncertain. Analysts point out that it is still unclear whether these chip giants will pay their shareholders using existing cash reserves or convert the dollars they hold into won.