South Korea is opening up its foreign exchange market with a push to operate 24 hours a day and establish an offshore Korean won settlement system, Yonhap reported. At present, the country’s FX market operates from 9 a.m. local time until 2 a.m. the following day.
Opening Up the Forex Market
Confirming the initiative, the South Korean finance ministry explained that opening up the forex market will help the country get included in the developed market index of global index provider Morgan Stanley Capital International (MSCI), which will be unveiled later this year.
The current forex market hours allow European investors to access the South Korean market, but the timing is unfavourable for US-based investors.
“There is quite a time limit in the currency trading market, but we plan to scrap nearly all of it,” South Korean President Lee Jae Myung said yesterday (Tuesday) at an investor event in New York.
South Korea maintained a tight grip on its currency markets after the destabilising capital flight during the Asian Financial Crisis in the late 1990s. However, it began gradually opening up the onshore currency markets to foreigners in 2024.
If the new plans are implemented, foreign financial firms will be able to hold won accounts in Korea and directly manage won transactions.
Digital Won Plans Suspended
South Korea also considered launching a digital won but suspended the project earlier this year.
The country’s central bank began exploring a digital version of the won in April 2020. However, the Bank of Korea made it clear that its tests did not mean it intended to launch a central bank digital currency (CBDC).
The Korean regulator completed the first phase of CBDC simulation testing in December 2021. That stage examined basic functions of the digital currency, such as creation, issuance and distribution. However, it suspended preparations for the second phase of its digital currency pilot, which had been scheduled for the fourth quarter of 2025.
Read more on South Korea:
