South Korea to Implement Measures for Better Management of Foreign Exchange

In an effort to increase access for offshore investors, the finance ministry of South Korea announced on Feb 6 that the government would be putting plans in place to better manage foreign exchange settlement risks. Following Vice Finance Minister Kim Byeong-hwan's visit to London on Feb 5 to meet with foreign investors, the ministry released a statement.

According to the statement, the government will make the announcements this month in response to requests from overseas investors for easier access to currency exchange. The foreign investors also made the point that, when exchanging with various counterparties in various time zones, settlement failure risks must be managed in compliance with international standards. They also brought up the subject of the currency hedging cap.

South Korea is preparing this year to open its onshore dollar-won exchange market to foreigners, with direct participation by overseas institutions from the first half of 2024 and extended trading hours from the second half. It began accepting applications from foreign institutions last October for market participation.

So far, five firms have completed registration: State Street Bank & Trust Company (SSBT) of Hong Kong, SSBT of London, HSBC Bank (Singapore), Credit Agricole CIB in Paris and MUFG Bank in Tokyo. Three to four more firms are expected to register this month, according to a source with direct knowledge of the matter.