{"id":2202363,"date":"2023-09-27T08:00:58","date_gmt":"2023-09-26T23:00:58","guid":{"rendered":"https:\/\/koreapro.org\/?p=2202363"},"modified":"2023-09-27T01:13:24","modified_gmt":"2023-09-26T16:13:24","slug":"south-korea-opens-up-access-to-local-currency-market-benefits-and-risks","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/09\/south-korea-opens-up-access-to-local-currency-market-benefits-and-risks\/","title":{"rendered":"South Korea opens up access to local currency market: Benefits and risks"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">South Korea\u2019s finance ministry <\/span><a href=\"https:\/\/www.moef.go.kr\/nw\/nes\/detailNesDtaView.do?searchBbsId1=MOSFBBS_000000000028&amp;searchNttId1=MOSF_000000000065968&amp;menuNo=4010100\"><span style=\"font-weight: 400;\">announced<\/span><\/a><span style=\"font-weight: 400;\"> Tuesday that it is set to broaden access to its local currency market by permitting offshore companies to apply for trading rights in the coming month. This move is a part of Seoul\u2019s push to include won securities in major global indexes. The green light for this initiative came after a cabinet meeting led by President Yoon Suk-yeol and these amendments to the foreign exchange rules are scheduled to go into effect on Oct. 18.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In its pursuit to integrate the won-denominated assets into developed-market indexes and attract increased foreign investment, South Korea is reevaluating its existing onshore trading constraints. Foreign institutions, upon registration, can partake in the domestic market via FX brokerage firms. However, they must meet specific criteria, such as demonstrating financial stability and having adequate credit extension arrangements with current market players. The country\u2019s long-term vision is to have the onshore won market available round the clock, following a planned extension to 2 a.m. next year.<\/span><\/p>\n<p><b>Why It Matters<\/b><\/p>\n<p><span style=\"font-weight: 400;\">South Korea\u2019s decision to grant offshore companies access to its local currency market signals a broader ambition: courting foreign investments to revitalize various sectors, potentially driving economic growth. This move might also set the stage for a more extensive overhaul of the nation\u2019s financial systems, pushing for increased transparency and fortifying regulatory structures, potentially being upgraded to a developed market by <\/span><a href=\"https:\/\/koreapro.org\/2022\/08\/why-south-koreas-powerful-economy-is-still-considered-a-developing-market\/\"><span style=\"font-weight: 400;\">MSCI<\/span><\/a><span style=\"font-weight: 400;\">, which would allow the ROK to attract more foreign capital.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, this strategic pivot isn\u2019t without its complications. The influx of foreign investors could usher in heightened market volatility, rendering the won vulnerable to swift and unpredictable shifts. This vulnerability could be accentuated during periods of inter-Korean tensions as foreign investors react to geopolitical developments. Additionally, as offshore firms navigate Seoul\u2019s rigorous financial regulations, ensuring compliance could present regulatory hurdles. Such oversight will likely necessitate expanded resources, adding complexity to the supervisory process.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>South Korea\u2019s finance ministry announced Tuesday that it is set to broaden access to its local currency market by permitting offshore companies to apply for trading rights in the coming month. This move is a part of Seoul\u2019s push to include won securities in major global indexes. The green light for this initiative came after [&hellip;]<\/p>\n","protected":false},"author":10407,"featured_media":2202364,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24],"class_list":["post-2202363","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefings","tag-business-economy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>South Korea opens up access to local currency market: Benefits and risks - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2023\/09\/south-korea-opens-up-access-to-local-currency-market-benefits-and-risks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Korea opens up access to local currency market: Benefits and risks - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"South Korea\u2019s finance ministry announced Tuesday that it is set to broaden access to its local currency market by permitting offshore companies to apply for trading rights in the coming month. 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