South Korea announced plans to open its currency market for 24-hour trading starting in July 2026, marking a major step toward internationalizing the won and seeking an upgrade to developed-market status from Morgan Stanley Capital International (MSCI). The move is part of a broader effort by the South Korean government to enhance financial market accessibility and attract global investment.

---

Roadmap for FX Market Internationalization

Vice Finance Minister Lee Hyoung-il said the government will release a roadmap in the first half of 2026 to improve the won’s accessibility and boost demand through measures such as offshore won financing.

Key initiatives include:

• Extending trading hours to 24/7 FX trading.
• Loosening reporting requirements for market participants.
• Simplifying the registration process for both domestic and foreign traders.
• Enhancing cross-border payment settlements and overseas financing.

Currently, the dollar-won market operates for just six-and-a-half hours daily, and direct dollar transactions are restricted to two domestic interbank networks. Expanding trading hours and easing regulations aim to increase liquidity and align South Korea’s FX market with global standards.

---

MSCI Developed-Market Upgrade

South Korea’s restricted currency-trading regime has historically prevented MSCI from upgrading it from an emerging market to a developed market. MSCI cites the limited accessibility of the won as a key impediment.

President Lee Jae Myung has prioritized the upgrade as part of his economic policy agenda, following reforms and tax measures introduced since taking office in June 2025. These market reforms underpin the KOSPI stock index rally, which surged 76% in 2025, marking its strongest performance since 1999.

---

Stock Market and Currency Performance

• The won reached its weakest levels since 2009 during 2025 but rebounded sharply in December, gaining 2.3% after market-stabilizing measures were implemented.
• Efforts to improve short-selling regulations, increase corporate disclosure in English, and simplify securities transactions were included in the FX and stock market upgrade roadmap.

These initiatives aim to boost investor confidence, particularly from foreign institutions, and align South Korea’s capital markets with international standards.

---

Economic Growth and Sector Support

The Ministry of Economy and Finance forecasts stronger growth in 2026, projecting:

• GDP growth: 2.0% (up from 1.8% in August), following 1.0% in 2025.
• Inflation: 2.1%, same as 2025.
• Exports growth: 4.2%, led by semiconductor demand for AI investment, despite U.S. trade tariffs.

The ministry plans targeted support for key industries:

• Semiconductors: Five-year plan with financial, tax, and regulatory support.
• Defense, biopharmaceutical, petrochemical, and steel: Ongoing policy support.
• Shipbuilding and nuclear energy: Boosted via the $350 billion U.S. trade deal investment package.
• Domestic manufacturing: Tax incentives to counter weakening due to overseas investments.

The government also aims to position South Korea among the world’s top three AI powers, enhancing long-term economic growth potential.

---

Key Takeaways

• South Korea to allow 24-hour FX trading starting July 2026.
• Reforms aim to internationalize the won and attract global investors.
• MSCI upgrade to developed-market status is a major policy goal.
• KOSPI surged 76% in 2025, supported by market reforms.
• Government pledges continued support for semiconductors, AI, defense, and manufacturing.