January 14, 2003, Kasumigaseki, Chiyoda City, Tokyo, Japan.
Unlike the snow piled thick outside the window, the Foreign Exchange Market Division office on the 5th floor of the main government building was bursting with heat, bustling frantically with activity.
Drrring! Drrring!
"Large-scale buy orders for yen are coming in from the Hong Kong side!"
"Find out who's behind the purchases and report immediately!"
"Yes, sir."
Amid the incessant ringing of telephones, the Foreign Exchange Market Division staff closely monitored the Tokyo foreign exchange market, where exchange rates were fluctuating by the second.
With the unstable exchange rate, every member of the division was on edge, their nerves stretched to the limit.
Although lunchtime had long passed, not a single person could leave their seat. They merely staved off hunger with delivered lunch boxes while continuing to keep a vigilant eye on market conditions.
Under normal circumstances, they would have split into shifts and gone out to eat, but with the dollar-yen exchange rate having already broken through the 140-yen level—considered the last line of defense—that was no longer possible.
Each monitor was densely packed with constantly changing exchange rate graphs, trade execution systems, and numerous foreign news websites, including Bloomberg terminals, to the point of being overwhelming.
The desks were already filled with monitors to the extent that space seemed insufficient. Yet, there was such an overwhelming amount of real-time information, news, and statistical data to track that everyone found themselves wishing for even more screens.
"Dubai crude oil prices have surpassed $27 per barrel!"
At the sharp, almost scream-like shout of an employee monitoring international oil prices, groans erupted from all around the room.
"Damn it. Are they out of their minds?"
"How far is this going to go?"
Some ran their hands roughly through their hair as they cursed, while others let out deep sighs as if the ground might collapse beneath them.
Nakamura Tateo, the section chief of the Foreign Exchange Market Division, also glared at the oil price graph displayed on his monitor with bloodshot eyes, his lower lip tightly clenched—he hadn't been able to sleep properly for days.
[WTI: 27.28 (▲0.74)]
[Dubai: 27.01 (▲0.88)]
[Brent: 27.11 (▲0.76)]
Not only Dubai crude—primarily imported by Japan and other Asian countries—but all three major global benchmark oil prices had now surpassed $27 per barrel.
"Damn it! Why does it have to break past $27 at a time like this? This is driving me crazy!"
For Japan, which is not an oil-producing nation and must import most of its crude from the Middle East, the rise in international oil prices was a critical blow to an already fragile economy.
It was bound to act as a negative factor not only for the stock market but also for the exchange rate, which had seemed to stabilize briefly after the dollar-yen rate broke past 140 yen.
Sure enough, one employee suddenly sprang to his feet, leaning forward over his monitor and shouting urgently.
"After dropping to 140 yen, the exchange rate is rebounding again!"
"What?"
Section Chief Nakamura checked the exchange rate graph and immediately frowned.
[USD/JPY: 140.98 (▼0.74)]
Just moments ago, the exchange rate had fallen by more than one yen, but as demand for dollars surged due to instability in oil prices, the rate was rapidly recovering its losses.
"Where on earth are all these yen being sold from?!"
As Section Chief Nakamura shouted angrily, rolling up the sleeves of his dress shirt, an employee on one side quickly responded.
"Mitsubishi, Mitsui, Sumitomo, Marubeni, and Itochu trading desks have all placed large-scale dollar buy orders."
At the mention of Japan's five major general trading companies, Nakamura's brow furrowed.
"It seems that with oil prices surging, they've hurriedly moved to exchange currency to secure funds for crude imports."
"We even asked companies to cooperate by refraining from currency exchanges for the time being to defend the exchange rate… and now they're throwing a wrench into things at a critical moment like this!"
Section Chief Nakamura shouted in a voice filled with irritation.
"Call them right now and tell them to stop buying dollars!"
"Yes, sir!"
Watching the employee hastily pick up the receiver, Nakamura let out a curse.
"Damn it..."
With a deeply furrowed expression, Nakamura approached Vice Minister Yoshikawa Daiki, who stood with his arms crossed, staring at the central screen.
Yoshikawa Daiki, the Vice Minister overseeing the Ministry of Finance's exchange rate policy—nicknamed "Mr. Yen"—maintained a composed, expressionless face even amid the rapidly unfolding situation.
"We've urgently managed to halt the dollar buying, but a significant volume has already been released in the meantime. It looks difficult to bring the exchange rate back below 140 yen today."
"I see."
Vice Minister Yoshikawa briefly showed a hint of regret before quickly erasing it.
"With oil prices soaring, it's not that I don't understand the urgency to secure crude supplies before prices rise further… but the timing couldn't be worse."
"Exactly."
Section Chief Nakamura replied with a face full of fatigue.
"Speculative forces had begun pulling out of their short positions one by one, so the decline was just about to accelerate… I never expected things to get tangled like this."
Although Ministry of Finance staff had hurriedly made calls to halt dollar purchases, within just a few dozen minutes, the five major trading companies had already bought hundreds of billions of dollars.
Of course, considering the total daily trading volume in the Tokyo foreign exchange market, it wasn't an overwhelmingly large amount.
The real issue was the timing of those dollar purchases.
The speculative forces that had been attacking the yen—starting with the Eldorado Fund—had begun closing their positions by buying back the yen they had previously sold. Just as the exchange rate, which had been rising continuously, reached its peak and was about to plunge sharply—
At that exact moment, the five major trading companies moved in the opposite direction, selling yen and buying dollars, effectively propping up the exchange rate from below and preventing it from falling rapidly.
If not for that, the rate had been on the verge of dropping below the 140-yen level—the final line of resistance—within the day. But now, with an obstacle blocking the way midway, Vice Minister Yoshikawa smacked his lips in frustration.
"Have we confirmed where the large-scale yen buy order from Hong Kong earlier came from?"
"We're not certain, but it's most likely an order placed by the Eldorado Fund."
"How large was the order?"
"They bought 55 billion yen in a single transaction."
Vice Minister Yoshikawa turned his head and looked at Section Chief Nakamura.
"There was a similar-sized order from Hong Kong yesterday as well, wasn't there?"
"That's correct."
At that, Vice Minister Yoshikawa's eyes sharpened like those of a hawk.
"Then there's a high chance it was those Eldorado Fund bastards."
"I think so too."
Section Chief Nakamura replied as he loosened his tie.
Turning his gaze back to the central screen displaying the yen–dollar exchange rate, Vice Minister Yoshikawa wore a bitter expression.
"With oil prices surging, dollar demand has increased significantly, propping up the exchange rate's decline—allowing the Eldorado Fund and other speculative forces to pull out without severely cutting into their returns."
Nakamura clenched his teeth beside him.
Watching the speculative forces that had driven the exchange rate up by attacking the yen now calmly take their profits and withdraw left him seething with frustration.
Even as the two conversed, the situation continued to evolve rapidly.
As the exchange rate—having only risen until now—began to show signs of falling, export companies that had been waiting on the sidelines started dumping their dollar holdings into the market all at once, before the yen rebounded sharply.
Ministry of Finance staff hurriedly made calls to the foreign exchange desks of major corporations like Toyota and Sony, as well as banks and securities firms, pressuring them to halt dollar selling.
"How can you be selling dollars right now?!"
"Didn't you see the cooperation request notice? No—don't just say you didn't know!"
"Damn it, they're not even answering the phone over here!"
Fortunately, some parties complied with the request and halted their dollar selling, but there were still quite a few who ignored the Ministry of Finance's directive and continued to dump dollars on the market, since selling dollars while the yen was weak promised substantial exchange gains.
As a result, speculative forces—including the Eldorado Fund—were able to unwind their positions far more easily than expected.
Ironically, Japan's status as a global trading nation with a vast number of export-driven companies ended up becoming a factor that hindered efforts to defend the exchange rate this time.
***
[Hynix Records 1.95 Trillion Won Loss Last Year
Amid the continued downturn in the semiconductor market and sluggish capital investment throughout last year, Hynix is reported to have once again posted a massive annual loss.
Compared to the 5.0735 trillion won loss recorded the year before, the deficit has been significantly reduced. However, despite creditors taking measures such as converting part of the debt into equity, reducing interest, and extending debt maturities, the company still carries a heavy burden of approximately 3.8 trillion won in debt.
Under these circumstances, most experts remain pessimistic about whether Hynix can make a comeback…]
Following the announcement of massive losses, and with growing speculation that the company may proceed with a large-scale rights offering after a capital reduction to secure investment funds, Hynix's stock price plunged by 7.3% in a single day.
[Hynix: 255 (▼20)]
Seok-won, sitting alone at his desk overlooking the Han River, stroked his chin as he looked at the article about the losses and the closing price of Hynix displayed on his monitor.
"With the stock already performing terribly due to consecutive losses, this is bad enough… and now they're saying they'll carry out a 21-to-1 capital reduction on the shares. From a shareholder's perspective, it's enough to drive anyone insane."
A capital reduction, in simple terms, refers to a company in financial distress artificially reducing the par value or number of its shares to decrease its capital.
Typically, when such a reduction is carried out, it primarily targets reducing the stake of major shareholders who bear responsibility for management.
"But in Hynix's case, management control has already been completely handed over to the creditor group, making them the largest shareholders, so that approach isn't really feasible."
With debts exceeding 2 trillion won already being written off, and the remaining liabilities restructured through debt-to-equity conversion, maturity extensions, and even interest reductions, it would be difficult to shift the burden of a capital reduction onto the creditors as well.
So the conclusion they reached was to consolidate shares at a ratio of 21 to 1 for both major shareholders and general shareholders alike.
"If I remember correctly, the par value of Hynix's stock was probably 5,000 won."
Considering that the stock, originally issued at a par value of 5,000 won at the time of listing, had now plunged far below half of that—down to just 255 won—it was clear just how dire the company's situation had become.
Leaning back into his cushioned chair, Seok-won's eyes gleamed.
"This may be a brutally difficult period for Hynix, but for me, it could be a once-in-a-lifetime opportunity."
After a brief moment of contemplation, Seok-won reached out and pressed the intercom button.
Soon, the familiar voice of Manager Na Seong-mi came through the speaker.
[Yes, how may I assist you, Chairman?]
"Contact President Yoon and tell him to come to my office immediately."
[Understood.]
After taking his hand off the intercom, Seok-won rested his elbow on the desk and once again looked at the Hynix stock price displayed on his monitor.
At this point, Hynix's stock was, quite literally, nothing more than a penny stock that no one even bothered to look at.
Shareholders who could no longer hold on were desperately dumping their shares just to recover whatever money they could, but there were hardly any buyers willing to take them.
"No one would ever imagine that a company being treated like a complete outcast right now will one day surpass one million won per share and rise to become a 'royal stock.' They say life is full of twists and turns—this stock, Hynix, fits that saying perfectly."
Seok-won let out a soft chuckle, his eyes gleaming as if he were gazing at a pearl buried in the mud.