South Korea’s long-cloistered currency is set to open up to a 24-hour trading cycle from July 6, with banks trialling the system from Monday. This shift is expected to increase demand for won assets, but also poses risks due to potential liquidity gaps and trading disruptions.
Background
South Korea’s currency market has been restricted to daytime trading hours, but the country is seeking to become a developed market and attract more global investors. The move to 24-hour trading is seen as a key step towards achieving this goal.
The won has been languishing near a 17-year low versus the dollar, making it vulnerable to large price swings. To mitigate these risks, reforms include permits for offshore investors to hold and trade the currency, an offshore won settlement system, and an overdraft policy.
Impact on Dealers
Dealers like Namkoong Taehun, a 47-year-old veteran of the FX trading team at Hana Bank in Seoul, are preparing for the increased workload that comes with 24-hour trading. Banks are adding night shifters to their roster systems to cope with the demand.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
