South Korea plans to extend won trading hours starting 2024

SOUTH Korea plans to significantly extend onshore trading hours for the won next year in an effort to improve access for foreign investors.

The government will work to allow US dollar-won spot trading until 2 am as early as the second half of 2024, versus the current close of 3.30 pm, Finance Minister Choo Kyung-ho said during a press briefing on Thursday (Jan 12). Changes will also be made to enable financial companies based outside of Korea to participate in the onshore market, he added.

The changes are in line with efforts in recent years to lure foreign investors and boost the case for the nation’s stocks to be included in MSCI’s developed-market stock index. The country has been wary of opening up its currency market after two financial crises in 1997 and 2007 triggered capital outflows, but the stance has been loosening as its market matures.

The government will announce measures to reform the foreign-exchange trading system in February, after releasing a general direction of a new currency law in January aimed at easing the burden on foreign investors, according to Choo.

“Regulations related to the foreign exchange markets were too exclusive and restrictive,” he said. “If more people take part, it will grow in size and diversity, helping to reduce volatility.”

Currently, the onshore US dollar-won market is open for six and a half hours from 9.00 am. Given the restricted hours, overseas investors rely on non-deliverable forwards to manage their exposure to the won.

Separately, Choo said steps to improve the stock market will be released later this month, including changes to the divided system as a way to encourage long-term investment. BLOOMBERG