South Korea to Extend FX Trading Hours, Shelves Digital Won

South Korea is preparing a sweeping reform of its foreign exchange market, with plans to allow trading around the clock and to introduce offshore settlement of the won, Yonhap reported.

At an investor meeting in New York, President Lee Jae Myung confirmed that trading limits would be lifted. "There is quite a time limit in the currency trading market, but we plan to scrap nearly all of it," he said, signaling a move toward a 24-hour system similar to major global hubs like New York and London.

Currently, the won trades from 9 a.m. to 2 a.m. the following day, meaning liquidity often dries up during U.S. hours. Officials believe extending trading and permitting foreign financial institutions to hold won accounts directly will improve accessibility and transparency. They also expect the changes to help South Korea secure inclusion in MSCI's developed markets index, a milestone that could draw significant capital inflows. MSCI is due to decide on the country's status later this year.

The reforms are notable in a country that has maintained strict currency controls since the Asian Financial Crisis in the late 1990s. While some restrictions were eased in 2024, regulators have continued to limit offshore access. The proposed changes would mark the most significant liberalization in decades.

At the same time, authorities are stepping back from efforts to launch a central bank digital currency. The Bank of Korea began exploring a digital won in 2020 and conducted a first pilot in 2021, simulating retail transactions. A second phase of testing had been scheduled for late 2025 but has now been suspended. Officials clarified that early trials did not guarantee adoption, and that current priorities lie in stabilizing and modernizing existing financial infrastructure.