Starting July 6, trading hours for the won-dollar foreign exchange will be extended to a continuous 24-hour format. This change is seen as a crucial step for South Korea as it aims to be included in the MSCI developed markets index.
The Seoul Foreign Exchange Market Operations Committee announced on May 31 that it had approved significant changes regarding trading hours and days for the won-dollar exchange during a meeting held on May 29.
Currently limited to 9 a.m. to 2 a.m. the following day, trading hours will be expanded to 6 a.m. Monday to 6 a.m. Saturday during New York's daylight saving time. At other times, trading will run from 7 a.m. Monday to 7 a.m. Saturday. Trading will also be available on holidays, except for weekends and January 1. Settlements will continue to be processed only on banking business days.
The committee stated, "This measure will eliminate gaps in trading hours and enhance convenience for domestic and foreign investors, as well as importers and exporters, while reducing transaction costs."
With the 24-hour trading, a time-weighted average price (TWAP) will be provided every hour. Opening, high, and low exchange rates will be reported based on the period from 6 a.m. to 6 a.m. the following day. The current closing exchange rate at 3:30 p.m. and the market average rate (MAR) will remain unchanged. The foreign exchange authorities plan to provide statistics based on these rates for the time being.
The authorities intend to revise related foreign exchange trading regulations, including changing the market average rate from MAR to TWAP, based on feedback from market participants gathered during the committee meeting in June.
Since the launch of the 'Foreign Exchange Market Modernization Plan' in 2023, the government has been gradually extending trading hours and easing restrictions on foreign transactions. In January, it officially announced that the foreign exchange market would be open 24 hours starting in July as part of its '2026 Economic Growth Strategy.'
This initiative is part of a broader trend toward liberalizing the foreign exchange market in pursuit of inclusion in the Morgan Stanley Capital International (MSCI) developed markets index. MSCI has previously assessed that South Korea's foreign exchange market does not meet the standards for developed currencies due to its limited accessibility for 24-hour trading through offshore markets.
However, some concerns have been raised about increased exchange rate volatility due to limited liquidity during nighttime trading. Kang Hyun-joo, a senior researcher at the Capital Market Research Institute, commented, "The expansion of trading hours is expected to alleviate gap risks and enhance the price discovery function of the regional market, representing an improvement in market microstructure."
* This article has been translated by AI.
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