South Korea launches 24-hour foreign exchange trading

South Korea's foreign exchange market commenced 24-hour trading on Monday, marking a significant reform aimed at enhancing its global competitiveness. The new system allows for continuous trading from Monday morning to Saturday morning, a substantial expansion from the previous hours.

On the first day of 24-hour trading, the won-dollar exchange rate closed the week higher, settling at 1530.3 won per dollar. This marked an increase from the previous trading day's close and the overnight session's closing price. The rate had opened at 1527.6 won and climbed as high as 1537.5 during the day, with analysts attributing the rebound to buying interest after a previous dip and the continued strength of the U.S. dollar.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, along with Bank of Korea Deputy Governor Kwon Min-soo, visited the trading room at Hana Bank's headquarters to mark the occasion. Choo emphasized that the 24-hour trading system reflects the high demand from foreign investors for South Korea's foreign exchange and capital markets, calling it a starting point for the won's global advancement.

Despite the extended trading hours, market observers anticipate a limited direct impact on the exchange rate's level. The fundamental drivers of the won's weakness, namely the strong U.S. dollar and continued outflows of foreign investment from the domestic stock market, are expected to persist. Analysts suggest that the ongoing preference for U.S. investments by domestic entities and portfolio adjustments by foreign investors will continue to influence currency movements, making it difficult for the won-dollar rate to decrease significantly in the near term.