Won-dollar rate plunges 13%, reshaping South Korean food companies’ earnings

  • A sharp won-dollar decline is reshaping South Korean food companies’ second-half earnings outlook.
  • The rate fell 186.5 won, or 13%, while SK Hynix began selling $26.5 billion raised through its ADR listing.
  • Export-heavy producers face weaker translated overseas revenue, while import-dependent companies may gain from lower raw-material costs.

The won-dollar exchange rate has fallen sharply, changing South Korean food companies’ second-half earnings outlook and exposing divergent effects based on revenue and cost structures. The rate fell 186.5 won, or 13%, from an intraday high of 1,559 won on June 5 to 1,372.5 won by the 28th of the month, while a separate report said it closed a week at 1,370.4 won after reaching 1,554.4 won on July 2. The latest decline followed dollar sales by domestic companies, including SK Hynix after its July 15 American Depositary Receipts listing, while expectations for U.S. monetary policy also influenced markets. Export-heavy Samyang Foods, Orion and Nongshim face lower won-denominated overseas revenue, whereas CJ CheilJedang, Lotte Wellfood and Ottogi may benefit from cheaper imported raw materials. Future currency movements remain uncertain as the ADR-related selling effect is expected to end by September and could be offset by U.S. rate increases, corporate dollar retention or weaker exports.

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