South Korea to Launch 24-Hour FX Trading in Push for MSCI Upgrade

South Korea has announced plans to open its foreign exchange market for 24-hour trading starting in July 2026. This move aims to remove existing restrictions and enhance the country’s chances of achieving an upgrade to developed-market status from Morgan Stanley Capital International (MSCI). The announcement was made by the finance ministry on January 9, 2026, as part of a broader strategy to increase the accessibility of the South Korean won in international markets.

Historically, South Korea has maintained a restricted currency-trading regime following capital flight during the Asian Financial Crisis in the late 1990s. According to Vice Finance Minister Lee Hyoung-il, the government plans to develop a roadmap for the internationalization of the won. This initiative is expected to significantly improve accessibility and boost demand for the currency, including efforts to facilitate offshore won financing.

The upcoming 24-hour trading will follow previous changes made two years ago, when South Korea extended trading hours to allow foreign entities to trade the won from abroad. Until then, the dollar-won market operated for only six-and-a-half hours a day, with direct dollar transactions limited to two domestic interbank networks. To further enhance the market, the finance ministry is introducing a new system for offshore won trading, easing reporting requirements, and simplifying the registration process for market participants.

In addition to these changes, the South Korean government is committed to following a roadmap for MSCI inclusion as outlined in its biannual economic policy announcement. This upgrade is a key priority for President Lee Jae Myung, who has focused on market reforms and tax measures to invigorate the domestic stock market since taking office in June 2025. Under this policy drive, the KOSPI stock benchmark performed exceptionally well, becoming the world’s best performer last year with a remarkable increase of 76%.

The won had recently been trading at its lowest levels since 2009, but it rebounded sharply towards the end of December 2025, gaining 2.3% due to market-stabilizing measures. Alongside the currency reforms, the government is also looking to improve regulations related to short-selling, enhance corporate filing requirements in English, and ease securities transactions to support the overall upgrade of the stock market.

Economic Forecasts and Industry Support

The finance ministry’s projections indicate that South Korea’s trade-dependent economy will grow by 2.0% in 2026, an increase from the previous forecast of 1.8%. Domestic demand and robust exports are expected to drive this growth, following a 1.0% expansion in 2025. Inflation is projected to remain stable at 2.1% in 2026, consistent with 2025 figures.

Exports are anticipated to rise by 4.2% this year, buoyed by strong demand for semiconductors, particularly in artificial intelligence investments, despite challenges posed by global trade slowdowns and U.S. tariffs. To further enhance the competitiveness of the semiconductor sector, the ministry plans to develop a comprehensive five-year policy plan by the fourth quarter of 2026. This plan will include financial and tax support as well as regulatory improvements.

The government also aims to position South Korea among the world’s top three powers in artificial intelligence to strengthen its growth potential. Support will extend to various industries, including defence, biopharmaceuticals, petrochemicals, and steel.

In relation to a significant $350 billion investment package pledged under a recent U.S. trade agreement, the ministry views this as a vital opportunity to enhance the shipbuilding and nuclear energy sectors while seeking new markets in the United States. Additionally, tax incentives for domestic production are expected to be introduced in the second half of the year, addressing concerns about a decline in the manufacturing sector due to rising overseas investments.