Story
South Korea Launches 24-Hour Won Trading in Bid for Developed Market Status
Summary
South Korea has initiated nearly round-the-clock trading for its currency, the won, a major reform aimed at improving access for foreign investors and securing an upgrade to developed market status from index provider MSCI.
South Korea initiated nearly 24-hour trading of the won against the U.S. dollar on Monday, a landmark foreign exchange reform designed to enhance market access for global investors and bolster the country's bid for inclusion in major developed-market indexes.
A Key Step in Market Reform
The new policy extends the onshore won-dollar trading window from local business hours to a near-continuous session, aligning it more closely with global currency markets in London and New York. This marks one of the most significant changes to the country's foreign exchange market in decades.
Previously, international investors were largely restricted to using offshore non-deliverable forwards (NDFs) to manage their won exposure outside of Korean trading hours. The overnight session will now be supported by designated domestic and international banks registered to participate in the local market, with authorities expecting liquidity to build gradually as more institutions join.
Push for a Developed Market Upgrade
This reform is a cornerstone of Seoul's long-standing effort to be upgraded from an emerging market to a developed market by index provider MSCI. MSCI has consistently cited restrictions in South Korea's foreign exchange market, including the limited trading hours, as a primary obstacle to reclassification.
AdOfficials hope that improving accessibility will strengthen South Korea's appeal to global investors. The move is part of a broader package of reforms that includes easing market access requirements for foreign entities.
Market Context
On the first day of extended trading, the won traded weaker against the dollar, with the USD/KRW pair rising 0.3%, according to Investing.com. The move followed a rebound for the currency late last week, which media reports attributed to anticipated currency flows linked to a planned offering by SK Hynix Inc.
The reform comes as South Korea's benchmark KOSPI stock index has surged more than 30% this year, making it one of Asia's top-performing major equity markets, driven by gains in heavyweight chipmakers and optimism over corporate governance reforms.