The shareholder return plan of the South Korean chip giant may become a new driver for the strengthening of the Korean won, with the market focusing on the effect of US dollar selling.

(1) Analysts point out that the unprecedented shareholder return plans of Samsung Electronics and SK Hynix are becoming key factors affecting the trend of the Korean won. Both companies need to pay dividends and repurchase funds in Korean won and may raise funds by selling US dollars or using existing Korean won. The amounts are vast and are expected to further extend the recent rally of the Korean won. (2) Since early July, the Korean won has recorded its fastest 40-trading-day gain since the end of 2022. This week, it broke through the 1,400 mark against the US dollar for the first time in over 10 months. (3) Citigroup points out that overseas stock investors may repatriate about half of the shareholder return funds to their home countries, partially offsetting Korean won buying; however, overall, as companies need to exchange more export income into the local currency, the return plans will still provide a net positive for the Korean won.