SEOUL — Dollar-selling activity tied to a U.S. share offering by South Korean chipmaker SK Hynix emerged in currency markets Wednesday, boosting the South Korean won to its highest point in more than a month, according to a source with knowledge of the situation who spoke to Reuters.
“There is forward selling related to SK Hynix American depository receipts (ADR) today,” the source said, choosing to remain anonymous given the sensitivity of the information.
Earlier this week, SK Hynix launched a U.S. share sale aimed at raising 43 trillion won — approximately $28.66 billion — attracting interest worth up to $7 billion from major investors. The offering is riding a wave of enthusiasm around artificial intelligence and ranks among the largest equity deals in the world.
Reuters reported Tuesday that SK Hynix is expected to bring U.S. dollars back into South Korea by around July 15, converting a portion of the funds raised through its ADR offering into the local currency.
The South Korean won climbed 1% against the dollar, breaking past the 1,500 mark and reaching 1,498.1 per dollar — its strongest level since May 29.
Brent Donnelly, president of market analytics firm Spectra Markets, explained the currency dynamics at play. “It is fresh USD equity proceeds to fund won-denominated capex… that is a giant USD receivable with a KRW use of funds,” he said.
Donnelly added that the bottom line for currency traders is straightforward: “FX traders will argue about timing, hedging, swaps, settlement, etc., but the first-order sign is: this is a dollar-selling, won-buying event.” He noted that even a small fraction of $29 billion would represent a significant flow in the dollar-won market.
South Korea’s Deputy Finance Minister Moon Ji-sung told Reuters on Wednesday that supply and demand conditions in the dollar-won market are expected to shift during the second half of the year, pointing to anticipated won demand tied to the SK Hynix share offering.
(Exchange rate: $1 = 1,500.5000 won)
