South Korean Chipmakers' Cash Distribution Plans Could Support Won's Rise

The unprecedented shareholder return plans of South Korea's two major chipmakers are becoming a key determinant for movements in the won exchange rate. If the companies turn to local money markets to finance these payouts, the won's recent rally could extend further. This emerges as a new balancing factor in the foreign exchange market. While the cash distribution plans of the chipmakers attract investor interest, they could increase demand for the local currency. If companies use local currency instead of foreign exchange for profit distribution, it could contribute to the won's appreciation. Analysts note that such large-scale buybacks and dividend payments could help strengthen the won by reducing foreign exchange supply. South Korea's tech giants are generating strong cash flows amid the recovery in global chip demand. Distributing these funds to shareholders could have a positive impact on both company valuations and macroeconomic indicators. However, the manner and timing of these plans could also bring market volatility. Experts emphasize that the sustainability of the won's current upward trend depends on the cash management policies of the chipmakers. If companies make payments in the local currency, this would create additional demand in the foreign exchange market and could accelerate the won's appreciation. Otherwise, foreign exchange outflows could put pressure on the won. This is not investment advice.