South Korea's currency weakened slightly against the US dollar Monday after a top economic official vowed to extend the trading hours of the country's spot dollar foreign exchange market by up to 30 minutes.
The won opened at 1,151.0 against the dollar, compared to 1,146.2 won cited at the close of the previous session.
Finance Minister Yoo Il-ho said at the weekend in Washington that trading hours of South Korea's foreign exchange market would be stretched in line with the Korean Exchange's stock trading hours by half an hour. The foreign exchange market consists of an onshore market where banks and futures companies trade from 9 am to 3 pm and an offshore futures market which opens for 24 hours a day.
Yoo dispelled concern about a wider fluctuation of the won saying there would be no big increase in trading volume even after trading hours were stretched.
His comment followed South Korea's decision to upgrade its market to the status of a "developed market" in the Morgan Stanly Capital International (MSCI) index, an important yardstick used by global investors when investing in emerging markets.
With exports tumbling, South Korea saw its currency strengthening against the dollar in March to 1,188.21 won on average from 1,217.35 won in the previous month. Meanwhile, the inflow of foreign money into its stock market has been shrinking.
Japan has struggled to revive its economy by lowering the yen's value through a fiscal stimulus package called "quantitative easing". In February, its central bank introduced negative interest rates, but financial institutions forecast that the yen will get stronger against the dollar.
In Seoul, there has been a debate over whether to come up with its own version of quantitative easing to revitalize the economy. But Washington has put the foreign exchange policies of Seoul, Beijing, and Tokyo under close watch.
In a clear policy shift to reduce its growing trade deficit, Washington has indicated it would not tolerate Tokyo's "competitive" deregulation policy and further intervention in the foreign exchange market.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
