The South Korean government is reportedly planning to use the foreign exchange stabilization fund to purchase US dollars obtained from the issuance of ADRs by SK Hynix in order to stabilize the Korean foreign exchange market.

According to sources cited by the South Korean Economic Daily, the foreign exchange management department is discussing the purchase of US dollars related to the issuance of SK Hynix ADRs through the foreign exchange stabilization fund to prevent fluctuations of the dollar against the Korean won.

Reports indicate that SK Hynix plans to use most of the funds raised through the ADR issuance for domestic investment, which is expected to lead to a significant inflow of US dollars into the domestic foreign exchange market.

There are speculations that if the foreign exchange regulatory agency uses the foreign exchange stabilization fund to purchase US dollars, it is highly likely to conduct over-the-counter transactions through banks.

The latest exchange rate is 1,487.14 Korean won to 1 US dollar, and 1,000 Korean won to 5.2724 Hong Kong dollars.

Earlier, the Korean won was weak, falling to 1,560 against the US dollar, the lowest level since 2009. At that time, there were reports that the South Korean government planned to stabilize the won's exchange rate through on-site foreign exchange inspections.

Subsequently, after SK Hynix announced its plan to issue ADRs and raise $26.5 billion, the trend in the foreign exchange market gradually reversed, and there were even reports of the South Korean government's concern over a large amount of funds flowing back to Korea after the issuance of ADRs