2 weeks Ago
SEOUL : South Korea will permit registered foreign financial institutions to engage in foreign exchange trading for current transactions, including export and import settlements, from mid-January, the finance ministry said on Thursday. South Korea has been gradually implementing measures to widen the use of the won in global markets and allowed foreign institutions to trade the won onshore directly using the domestic interbank system from last year. Allowing Registered Financial Institutions, or RFI, to facilitate FX deals for trade settlement purposes would be expanding their business scope as they can only currently trade the won for securities trading such as stocks and bonds.
The initiative, part of finance ministry's economic policy plans for the year ahead, is a step toward enabling investors to trade the won more freely after the government extended trading hours for the onshore won and FX swap markets to 2 a.m. from July, or the closing of London business hours.
"This means that RFIs are now able to conduct virtually all areas of foreign exchange trading to meet actual demand," finance ministry director You Chang-yeon said. The ministry also said it would deploy contingency plans to stabilise financial markets if needed, and vowed to closely cooperate with major countries abroad to ease volatilities. Asia's fourth-largest economy is experiencing a deepening political crisis after its president briefly imposed martial law in December which provoked public outrage.
The government hopes a fresh inflow of investments this year will boost financial markets at a time when the economy is fast losing its taxpaying population and as robust exports growth is threatened by a global trade war. For 2025, the government expects the economy to expand 1.8 per cent after growing 2.
1 per cent in 2024. It sees inflation at 1.8 per cent for this year, slightly below the central bank's target of 2 per cent.
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