SEOUL, June 26 - South Korea's currency will transition to a 24-hour trading cycle from July 6, a move that veteran trader Namkoong Taehun describes as 'daunting.' The shift aims to attract global investors and secure a developed market status from MSCI.
The won, currently near a 17-year low against the dollar, faces risks of volatility due to thin liquidity. While the KOSPI index hits historic highs, South Korean investors are increasingly favoring U.S. stocks, leading to record foreign selling.
To support this new trading model, reforms will allow offshore investors to hold and trade the won, aiming to eliminate longstanding currency restrictions that have hindered investment flows. Despite extending trading hours to capture offshore volumes, MSCI has expressed concerns over sufficient liquidity.
Banks are prepping by adjusting staffing for overnight trades, underscoring the increased demands on FX dealers like Shin Jae-min, who noted the intense pace that sometimes accompanies trading events, such as market reactions to major IPOs.