South Korea Unveils 24-Hour FX Trading to Boost Market Status

South Korea has announced plans to open its foreign exchange market for 24-hour trading, starting in July 2025, as part of a strategy to secure an upgrade to developed-market status. The finance ministry revealed this decision on January 9, 2025, highlighting its commitment to further liberalizing the currency market.

Historically, South Korea has maintained a restricted currency-trading regime following the capital flight during the Asian Financial Crisis in the late 1990s. This limitation has been identified by Morgan Stanley Capital International (MSCI) as a barrier to the country’s long-sought upgrade to developed-market status. Vice Finance Minister Lee Hyoung-il stated, “We will prepare in the first half a roadmap for the internationalisation of the won aimed at dramatically improving the won’s accessibility and increasing demand.”

The introduction of 24-hour trading follows a previous extension of trading hours two years ago, which allowed foreign entities to trade the won from abroad. Until recently, the dollar-won market was limited to just six-and-a-half hours a day, with direct dollar transactions restricted to two domestic interbank networks.

In addition to extending trading hours, the ministry plans to implement a new system for offshore won trading and to ease reporting requirements. Efforts will also focus on simplifying the registration process for market participants, enhancing cross-border payment settlements, and facilitating overseas financing.

The move aligns with President Lee Jae Myung’s broader economic reforms aimed at boosting the domestic stock market. Since he assumed office in June 2025, the KOSPI benchmark has seen remarkable growth, becoming the world’s top performer last year with a rise of 76 percent, marking its strongest performance since 1999.

Despite facing challenges, including a weak won trading at its lowest levels since 2009, the currency recently rebounded with a 2.3 percent gain due to market-stabilizing measures implemented at the end of December.

Economic Growth and Future Plans

The finance ministry forecasts that South Korea’s trade-reliant economy will grow by 2.0 percent in 2026, an increase from the 1.8 percent projected in August, driven by improving domestic demand and strong exports. The inflation rate is expected to remain steady at 2.1 percent in 2026, the same as in 2025.

Exports are projected to rise by 4.2 percent this year, building on a growth of 3.8 percent in the previous year, fueled by strong demand in the semiconductor sector, particularly for artificial intelligence technologies. The ministry has also committed to enhancing the competitiveness of the semiconductor industry through a five-year policy plan, which is set to be developed in the fourth quarter of the year.

To strengthen its position as a global leader in artificial intelligence, South Korea aims to support key industries, including defence, biopharmaceuticals, petrochemicals, and steel. The government also plans to introduce tax incentives to stimulate domestic production and mitigate concerns about the potential weakening of the manufacturing sector due to increasing overseas investments.

In response to a $350 billion investment package pledged as part of a trade deal with the United States last year, the ministry sees this as an opportunity to bolster sectors such as shipbuilding and nuclear energy while seeking new markets in the U.S.

The recent policy announcements reflect South Korea’s commitment to enhancing its economic framework and aligning with global market standards, paving the way for potential future developments in the financial landscape.