Won Strength Faces Year-End Dividend Demand
Amid the continued strength of the won driven by robust semiconductor exports, large-scale dividend repatriation at the end of the year is emerging as a variable for the downward trend of the won-dollar exchange rate. Forecasts indicate that exchange rate volatility could increase as the scale of di
The South Korean won has recently experienced strength due to robust semiconductor exports, leading to concerns about a potential year-end downward trend in the won-dollar exchange rate. The expected repatriation of large-scale dividends by foreign investors could reach up to $12.6 billion, exacerbating the downward pressure on the exchange rate.
On November 5, the won-dollar exchange rate closed at 1,342.1 won, up 0.6 won from the previous day. Forecasts predict an increase in exchange rate volatility due to the combined demands of these dividend repatriations and other dollar-related factors. Samsung Electronics and SK hynix are set to pay out a combined 44.1 trillion won in dividends from late November to December, with approximately 22.4 trillion won expected to be paid to foreign investors.
If a significant portion of these dividends is exchanged into dollars and repatriated, the scale could surpass the typical April to May dividend season by more than double. Increasingly, foreign investors are remitting a higher proportion of their dividends overseas, from 66% in 2020 to 89% in the first eight months of this year.
This shift in dividend repatriation patterns could lead to heightened demand for dollars, potentially intensifying the downward exchange rate pressure in November. Other dollar supply and demand factors, such as the initial public offering of Anthropic and the MSCI index rebalancing, may also influence the currency market in the coming months.
Still, the forecast remains that the strong won trend will persist, driven by strong export performance and a robust trade surplus.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
