Home Most Popular Easing South Korea’s Financial Shackles: A Battle with FX History

Easing South Korea’s Financial Shackles: A Battle with FX History


A Struggle for Global Recognition

South Korea is making strides to elevate the status of its financial markets on the global stage but is grappling with long-standing currency restrictions that have hindered investors and traders.

Emerging Market Woes

Despite being a tech powerhouse and an economic force, South Korea remains pegged as an emerging market due to issues surrounding its currency management practices.

Unraveling Arcane Restrictions

Efforts are underway to globalize the won, such as extending trading hours, to empower businesses and investors by providing better flexibility in currency conversions.

The Korea Discount

Archaic regulations on cross-border transactions contribute to the global underperformance of South Korean stocks, adding to the challenges faced by market participants.

Regulatory Vigilance

Authorities stress the importance of monitoring foreign exchange markets to prevent disruptive currency swings while navigating the path towards a more open financial ecosystem.

Opening Doors to Foreign Banks

On the horizon is an extension of trading hours in South Korea, with London hours set to be included, anticipating increased foreign participation in the interbank market.

Driving Economic Transformation

President Yoon Suk-yeol’s initiatives aim to eliminate the Korea Discount, attract sizable investments, and secure positions in premier global indexes like the FTSE World Government Bond Index and MSCI’s developed market benchmarks.

Unlocking the Won’s Potential

Despite the won’s significant daily trading volume, South Korea’s adherence to stringent forex regulations has kept it tethered to the emerging market realm, hindering its full potential in the global forex landscape.

A Glimpse into the Future

Industry experts believe that relaxation of forex rules could propel the won to surpass even established currencies like the British pound, positioning South Korea as a formidable player in the global economy.

Balancing Act

While South Korea is taking steps to liberalize its financial markets, caution and regulatory scrutiny borne out of past financial crises are shaping the pace and scale of reforms.

Forex OTC turnover by currency https://reut.rs/43fm8vJ

(Additional reporting by Jihoon Lee in Seoul and Rae Wee in Singapore. Editing by Sam Holmes.)

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