Story
South Korea Launches 24-Hour Won Trading in Push for Developed Market Status
Summary
South Korea has initiated nearly 24-hour trading for its currency against the U.S. dollar, a major reform aimed at improving access for foreign investors and supporting its bid for inclusion in global developed market indexes.
South Korea on Monday began round-the-clock trading of the won against the U.S. dollar, a landmark foreign exchange reform designed to attract global investors and bolster the country's long-standing bid for developed-market status.
A Bid for Developed Market Status
The move is a central component of Seoul's strategy to secure an upgrade to MSCI's Developed Markets Index. According to Investing.com, the global index provider has consistently cited restrictions in the country's foreign exchange market as a key obstacle to reclassification.
By extending trading hours, authorities aim to address these concerns about market accessibility. Previously, onshore dollar-won trading was largely confined to local business hours, compelling many international investors to use offshore non-deliverable forwards (NDFs) to manage their currency exposure.
New Market Structure
The new overnight trading session will be facilitated by designated domestic lenders and registered international banks. The reform brings the onshore won-dollar market more in line with major global currencies that trade continuously.
AdAuthorities expect market liquidity to build gradually as more overseas institutions begin to participate in the extended hours. This change is part of a broader package of reforms that includes easing market access requirements for foreign investors.
Market Context and Reaction
The launch comes amid a strong year for South Korean equities, with the benchmark KOSPI index climbing more than 30% year-to-date, driven by gains in AI-related chipmakers and optimism over corporate governance reforms.
On its first day of extended trading, the won traded slightly weaker, with the USD/KRW pair rising 0.3%, as reported by Investing.com. Officials hope that the improved FX access will further enhance South Korea's appeal to global capital and strengthen its case for reclassification by index providers.