SEOUL : South Korea’s plans to loosen restrictions in its currency market will raise the won’s global status and, as a result, boost business opportunities for local financial firms, a vice finance minister told Reuters on Thursday.
Vice Minister Bang Ki-sun said the government was working on follow-up measures with the aim of implementing the plans in July next year, while dismissing concerns about the won facing a loss of stability.
“We are not fully allowing the won to be freely traded outside the country but just make it more convertible,” Bang told Reuters in an interview, adding the government would still maintain its oversight over the financial institutions trading the won.
South Korea has grown to one of the world’s top 10 economies in just a few decades but has kept a tight grip on its currency market mainly out of the trauma from its near sovereign default in the late 1990s during the Asia financial crisis.
The new measures call for more than doubling the trading hours on the won until past midnight local time and allowing qualified global financial firms to directly trade the currency through two onshore spot brokerage houses.
South Korea’s economy suffered a contraction in the December quarter and Bang said the most recent information indicated it would return to growth in the January-March period, without providing specific data.
He said there was no meaningful factor seen behind the massive foreign fund outflow during the past two consecutive months from local bond market other than the fact there was a large amount of bonds coming to maturity during the period.