- According to Namkoong Taehun, a Seoul trader with 18 years of experience in foreign exchange trading, the South Korean foreign exchange market is about to enter a new era of "around-the-clock operation," which will completely change the ecology of won trading and also means that traders will face unprecedented pressure.
- Starting from July 6, South Korea will officially launch a 24-hour trading mechanism for the won, with banks beginning trial operations this Monday. This means that the won market will end its long-standing structural arrangement limited to fixed trading hours and gradually align with the around-the-clock model of major global currency markets.
- Namkoong recalls that when he first entered the industry, the foreign exchange market was still a "nine-to-three" closed system with only a handful of participating institutions. Now, the market size has significantly expanded, with a substantial increase in the number of participants and the complexity of transactions.
He stated, "The market has now expanded exponentially. There is a clear increase in demand for won assets, but we are also concerned that the workload will significantly rise."
One of the core goals of this reform is to enhance the attractiveness of the Korean market to global investors and to strive for an MSCI "developed market" rating.
South Korea has long hoped to eliminate the so-called "Korea Discount," a problem of long-term undervaluation of the stock market due to factors such as capital controls, complex governance structures, and policy uncertainty.
Korean government officials stated that in the past, foreign investors could only conduct limited currency exchanges, but with the implementation of the new mechanism, non-resident investors will be able to directly hold and use the won and trade through an offshore settlement system.
Although the reform is seen as a major advancement, there is widespread concern in the market that 24-hour trading may exacerbate volatility, especially with the won operating near a 17-year low.
Analysts point out that in the context of uneven global liquidity distribution, extending trading hours may lead to more severe price fluctuations of the won during nighttime or low liquidity periods, especially when foreign capital is concentrated in rebalancing or when risk aversion sentiment rises.
