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South Korea Launches Round-the-Clock Won Trading in Bid for Developed Market Status
Summary
South Korea has initiated round-the-clock trading for its currency, the won, against the U.S. dollar. The major reform aims to improve access for international investors and support the country's bid for inclusion in developed-market equity indexes.
South Korea launched round-the-clock trading of the won against the U.S. dollar on Monday, a significant reform in its foreign exchange market. The move extends trading hours to operate nearly 24 hours a day, aligning the onshore market more closely with major global currency markets and allowing overseas investors to trade outside of typical Asian business hours.
This reform is a central component of South Korea's campaign to have its equity markets upgraded to MSCI's Developed Markets Index. Previously, restrictions and limited trading hours in the country's foreign exchange market were cited by MSCI as a key obstacle to reclassification.
Prior to this change, onshore trading of the dollar-won pair was largely confined to local business hours, compelling many international investors to use offshore non-deliverable forwards to manage their currency exposure. The new overnight trading session will be facilitated by designated domestic lenders and registered international banks.
AdAuthorities expect liquidity in the extended hours to build gradually as more overseas institutions participate. The launch is part of a broader package of measures to modernize capital markets and ease access for foreign investors, which officials hope will bolster South Korea's appeal and support its case for the developed-market upgrade.