SEOUL (Reuters) – South Korea’s finance minister said on Wednesday the government is reviewing a plan to improve the access of foreign traders to its currency market as it aims for inclusion on the MSCI developed markets index.
The plan comes as the finance ministry is conducting a month-long survey of major foreign investors, to try to determine obstacles to South Korea’s inclusion in the MSCI developed market index.
“The survey is still ongoing so it is difficult to lay out every detail … but the two biggest issues were limited trading time and difficulties of direct participation in the currency market,” Finance Minister Hong Nam-ki said.
“Now that conditions (in the currency market) have changed a lot from the past … we have plans to make a practical improvement in the system that investors can feel.”
In 1997, South Korea’s exchange system was changed to a free-float system from a pegged system but the MSCI has long cited the absence of an offshore currency market for the won as an obstacle in promoting South Korea to developed market status.
Abroad, the won is mainly traded in the Non-Deliverable Forwards (NDF) markets.
The ministry hopes that South Korea will be included on an MSCI watchlist in June, with a final listing in 2024.
Separately, the minister said South Korea had been planning on joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trading bloc since 2019 and it would submit an application during the administration of President Moon Jae-in.
Moon’s five-year term ends in early May.
Further details on the ministry’s plans will be part of a bi-annual economic policy plan announced on Dec. 20.
(Reporting by Joori Roh; Additional reporting by Cynthia Kim; Editing by Robert Birsel)
