Why South Korea’s Making It Easier to Trade the Won Currency

South Korea will extend local trading hours for the won on July 1, following a six-month pilot period. The initiative is a step toward allowing investors to deal in the currency around the clock. This may eventually boost the case for the nation’s stocks and bonds to be added to global indexes, stoking international demand for those securities. By lengthening the hours, Seoul is signaling a readiness to welcome more of the volatile flows of global capital from which it tried to shield its economy in the aftermath of the Asian Financial Crisis. Here’s what to know about the upcoming changes and the potential implications of the shift.

Right now, the won can only be swapped directly with the dollar via the local interbank market, and with the yuan either in Seoul or Shanghai. Trading in the onshore currency market runs from 9 a.m. to 3:30 p.m. local time. There is no offshore won trading. When onshore markets are closed, foreign investors have to rely on derivative contracts known as non-deliverable forwards to manage their exposure to the won.