Korea's Foreign Exchange Stabilization Fund Absorbs SK Hynix's $20 Billion, Korean Won Surges Over 12% in Two Months
nashnova research
Korea's Foreign Exchange Stabilization Fund bought roughly $20 billion of the dollars SK Hynix repatriated from its ADR listing — 75% of the total raise — cushioning a one-off conversion shock while the won rallied over 12% from a 17-year low in two months.
Who took the other side of a $20 billion conversion?
Sources reveal for the first time: after SK Hynix completed its ~$26.5 billion ADR listing in July, the concentrated dollar-selling from converting proceeds into won was absorbed by Korea's Foreign Exchange Stabilization Fund via over-the-counter trades.
The fund bought ~$20 billion, or 75% of the total raise.
This means → it was not an ordinary market flow but a sovereign fund stepping in to prevent a single corporate event from triggering an uncontrolled won spike.
What is the FX Stabilization Fund — and how much firepower remains?
The Foreign Exchange Stabilization Fund — a sovereign pool holding only dollars and won, jointly managed by Korea's finance ministry and central bank — was sized at 135.1 trillion won (~$98.7 billion) under last year's congressional plan.
This week's budget proposal, however, puts the fund at roughly 106.5 trillion won — a notable drawdown.
In plain terms = authorities had already spent down dollar reserves defending the won; absorbing SK Hynix's conversion flow refilled the tank while steadying the currency — two goals with one trade.
How far has the won bounced?
The won hit roughly 1,550 per dollar in late June — a 17-year low.
It has since rallied more than 12% over the past two months, trading at 1,363.34 at the time of reporting.
This reflects more than spontaneous market recovery — sovereign intervention was a key pillar of the rebound.
Will chipmakers' shareholder-return plans keep the won rising?
SK Hynix and Samsung Electronics have both announced large shareholder-return programs, seen by the market as another potential catalyst for won strength.
Hanwha Investment Securities economist Choi Kyu-ho noted: "These companies must pay returns in won, and the sums are huge — they may ultimately need to sell more dollars to raise the funds."
Analysts caution, however, that it remains unclear whether the chipmakers will tap existing won cash or convert dollar holdings; how much foreign shareholders ultimately remit out of Korea is also an open question.
In plain terms = shareholder payouts are theoretically won-positive, but the source of funds and the direction of outflows are both undetermined — whether this becomes a durable catalyst is still a question mark.
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