SK Hynix to Inject "Currency Swap-Level" Dollar Liquidity into Foreign Exchange Market

Following its successful listing on the U.S. Nasdaq, SK Hynix is expected to inject a "currency swap-level" influx of dollars into the South Korean foreign exchange market, a move analysts are describing as a refreshing downpour for the local currency.
On the 10th, SK Hynix raised approximately 26.5 billion dollars through the issuance of American Depositary Receipts (ADRs). The proceeds from the public offering are scheduled to be deposited into SK Hynix on the 14th, when the offering process concludes.
Given that SK Hynix plans to use most of these funds for domestic investments—including the Yongin Semiconductor Cluster, the Cheongju P&T7 advanced packaging plant, and the procurement of extreme ultraviolet (EUV) lithography equipment—the large-scale conversion of these dollars into Korean won will effectively serve as a massive "dollar supply" for the South Korean foreign exchange market.
An official from SK Hynix stated, "We plan to use the ADR funds for investments disclosed in our securities registration statement and will convert a portion of them into won for execution," adding, "The scale and timing of the currency exchange have not yet been finalized."
The market anticipates that this large-scale dollar inflow will act as a factor to stabilize the exchange rate, which has been on an upward trend for a considerable period.
In fact, even before the ADR issuance was confirmed, the foreign exchange market saw forward exchange selling, which helped the won-dollar exchange rate, previously hovering around 1,560 won during trading, to pull back into the 1,400 won range.
The scale of the incoming dollars is being evaluated as "currency swap-level."
The amount raised by SK Hynix is equivalent to approximately 73% of South Korea's trade surplus of 36.2 billion dollars recorded in June.
Unlike many companies that retain a significant portion of the dollars earned from exports to fund other overseas investments, the funds from this SK Hynix listing are intended for domestic investment, meaning they will involve actual currency conversion.
Securities firms project that the company will generate an operating profit of around 300 trillion won this year, suggesting that its capacity for AI semiconductor investment will further expand when combined with cash secured from future operating activities.
The prevailing view is that the actual currency conversion will begin between the second half of July and September, following the deposit of the public offering proceeds.
Kwon Ah-min, an analyst at NH Investment & Securities, said, "It appears that currency conversion will begin from the middle to the latter part of this month," adding, "While the company will sequentially sell dollars to secure the won needed for domestic facility investments, not all of the raised funds will be converted into won, as there are areas that require foreign currency payments, such as purchasing equipment from ASML in the Netherlands."
(Photo: Courtesy of Nasdaq, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.