Won Strengthens Amid Samsung, SK hynix Shareholder Return Plans

Samsung Electronics and SK hynix's massive shareholder return plans are expected to drive further strengthening of the South Korean won, according to market experts. The combined total of the two companies' programs is estimated at over 150 trillion won ($108 billion), which could lead to additional dollar selling and downward pressure on the won-dollar exchange rate.

NH Investment & Securities projects that the won could strengthen to the 1,340-1,350 per dollar range, citing the chipmakers' large-scale shareholder return plans alongside broader weakness in the U.S. dollar. The won-dollar exchange rate recently fell to the high 1,300-won range for the first time in 11 months.

SK hynix and Samsung Electronics have announced massive shareholder return programs worth 40 trillion won and 90-110 trillion won, respectively, bringing the combined total to as much as 150 trillion won. Converting dollar holdings into won to fund dividends and share buybacks generally increases the supply of dollars in the foreign exchange market.