Key facts
- South Korea's foreign exchange authorities purchased approximately $20 billion in U.S. dollars from SK Hynix.
- The purchase followed SK Hynix's $26.5 billion American depositary receipt listing on Nasdaq.
- The proceeds from the SK Hynix offering were largely converted into South Korean won.
- South Korea's resident foreign currency deposits hit a record $128.34 billion in July.
- Dollar deposits surged by a record $11.12 billion in July.
South Korea's foreign exchange authorities intervened in the market, purchasing approximately $20 billion in U.S. dollars from SK Hynix following the semiconductor giant's substantial American depositary receipt (ADR) listing. The proceeds from SK Hynix's $26.5 billion Nasdaq offering, which closed in mid-July, were largely brought into the country and converted into the local currency, contributing to a significant surge in foreign currency deposits.
Resident foreign currency deposits in South Korea reached an all-time high of $128.34 billion at the end of July, an increase of $15.01 billion from June. Dollar deposits were the primary driver of this growth, soaring by a record $11.12 billion to $108.92 billion. The Bank of Korea attributed this rise to large corporations receiving foreign-currency payments, inflows from foreign bond issuances, and investors purchasing dollars as the South Korean won strengthened sharply against the U.S. dollar. The won appreciated from 1,549.4 per dollar at the end of June to 1,424.0 by the end of July.
The substantial dollar inflows from SK Hynix's offering were closely monitored in Seoul's foreign exchange market, as they were expected to influence domestic currency flows. The chipmaker stated the funds would be used for domestic investments, including its Yongin semiconductor cluster and a new advanced-packaging plant.