South Korea Launches 24-Hour Won Trading to Boost Global Investor Access

South Korea initiated nearly 24-hour trading of its currency against the U.S. dollar on Monday, a landmark reform designed to enhance market access for global investors. The move is a critical component of Seoul's long-standing effort to have its equity market upgraded to developed market status by major index providers.

A Major FX Market Overhaul

The reform extends the onshore won-dollar trading window from its previous limitation of local business hours to a near-continuous session. This change brings the Korean won market more in line with global currency hubs and is intended to reduce friction for international investors, who previously had to rely on offshore non-deliverable forwards (NDFs) to manage their currency exposure outside of Asian trading times.

According to the source, the overnight trading session will be facilitated by a group of designated domestic lenders and registered international banks. Authorities anticipate that market liquidity will build gradually as more overseas financial institutions begin to participate.

Drive for Developed Market Status

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This policy change is a direct response to feedback from index provider MSCI, which has consistently cited foreign exchange market restrictions as a primary obstacle to reclassifying South Korea as a developed market. By improving accessibility, officials hope to strengthen the country's case for an upgrade.

The extended trading hours are part of a broader package of capital market modernizations undertaken by the government, which also includes easing other market access requirements for foreign investors. These efforts aim to build on strong market performance, with the benchmark KOSPI index having climbed more than 30% this year, making it one of Asia's top performers.

Market Reaction

On the first day of the new trading hours, the Korean won traded slightly weaker. The USD/KRW currency pair rose by 0.3%, according to the report. This followed a rebound for the won late last week from its weakest point against the dollar since 2009.