South Korean Won Trades 24 Hours as Government Fights Dollar Strength

The South Korean government has introduced 24-hour trading for the won against the US dollar, effective Monday, in a move aimed at countering the currency’s recent weakness and enhancing foreign investor access. Previously, the onshore foreign exchange market operated for approximately 17 hours a day, from 9:00 a.m. to 2:00 a.m. local time.

The decision to extend trading hours is part of a broader strategy to liberalise the nation’s financial markets and secure developed market status from global index provider MSCI. The won has depreciated roughly 6% against the dollar this year, pressured by foreign investors rebalancing their portfolios and offloading local stocks following a sharp rally in the domestic equity market.

According to OCBC foreign exchange strategists Sim Moh Siong and Christopher Wong, the won’s decline appears to be driven more by portfolio flows than trade fundamentals. They noted that continued selling of won-denominated assets by foreign investors, coupled with broad US dollar strength, is weighing on the currency. The won is expected to remain under pressure unless foreign investors slow their selling of local shares, the dollar loses momentum, or US Treasury yields decline more significantly.

On the first day of the new 24-hour trading regime, the won continued its weakening trend. LSEG data showed the dollar opening at 1,527.41 won before strengthening to 1,534.15 won, up approximately 0.3% from Friday’s New York close of 1,529.01 won per dollar.