South Korea launched 24-hour trading of its currency, the won, on July 6, with the won-dollar exchange rate opening at 1,527.6 won per dollar and fluctuating around the 1,530-won range, a slight rebound from previous trading sessions. Despite ending the first day up 4.7 won from the previous close, the trading volume was observed to be below average, suggesting a cautious start to the extended trading hours. This move is central to South Korea's ambition to upgrade its status to a developed market by MSCI Inc. and enhance its global financial presence.
The 24-hour trading system, which now runs from 6:00 a.m. Monday to 6:00 a.m. Saturday, replaces the previous 9:00 a.m. to 2:00 a.m. next-day schedule. This change aims to improve accessibility for foreign investors and allow the won's price to reflect global events in real-time, reducing the reliance on non-deliverable forwards (NDFs). Hourly benchmark pricing, known as time-weighted average price (TWAP), will now be provided, although the Market Average Rate (MAR) will continue to be used in the interim.
Finance Ministry officials in "the box" in Sejong are closely monitoring price swings and trading volumes, indicating heightened vigilance as the won has been the worst-performing Asian currency in the first half of the year, dropping to a 17-year low and recently trading around 1,540 per dollar. While the extended trading is expected to smooth price action eventually, analysts like Bumki Son of Barclays Plc caution that greater market openness may initially lead to higher volatility. Banks, including Woori Bank, have expanded their dealing teams in London and Seoul to prepare for the change.
Despite the current account surplus of $102.7 billion in the first four months of the year, South Korea has seen substantial capital outflows, with over $60 billion from outbound direct investment and local investors buying foreign securities, and global investors pulling $43.6 billion from Korean equities. This shift aims to make holding won assets more attractive by removing operational friction points, as stated by Ali Bora Yigitbasioglu of Pictet Asset Management. South Korea views this as a critical infrastructure upgrade to meet the accessibility and convenience standards of developed markets, according to Deputy Finance Minister Moon Jisung.
