South Korea to Launch 24-Hour FX Market, Ease Won Trading Rules

The South Korean won rose to around 1,470 per dollar, pausing losses after hitting a two-week low, supported by signals of net inflows of foreign currency. South Korea reported its largest-ever annual current account surplus in 2025. The surplus reached US$123.05 billion, exceeding both the previous record of $105.1 billion set in 2015 and the central bank’s forecast of $115 billion. Strong exports, particularly amid a semiconductor upcycle, further reinforced investor confidence. Further bolstering sentiment, the government successfully issued $3 billion in overseas foreign exchange stabilization bonds, the largest single issuance since 2009. The offering, split into three- and five-year tranches, was tightly priced, signaling strong demand and bolstering confidence in South Korea’s external finances. While primarily aimed at strengthening foreign-exchange reserves, the bond sale helped ease near-term pressure on the currency.

The South Korean won depreciated to around 1,464 per dollar, erasing earlier-week gains to hit a two-week low, as persistent domestic demand for US dollars continued to outweigh official stabilisation efforts. The decline reflects structural capital outflows, with Korean retail investors increasingly favouring US equities. Overseas holdings hit nearly $171 billion as of January 29, while a surge in US stock purchases has added further pressure. The shift toward foreign assets has also pushed resident dollar deposits to a record $119.43 billion, limiting the impact of FX policy tools despite solid economic fundamentals and equity market gains. Meanwhile, concerns were partly eased by upgraded economic forecasts. A KCIF report showed eight major global investment banks raised South Korea’s 2026 growth outlook to 2.1%, up 0.1 percentage point from last month and above the Bank of Korea’s 1.8% and the government’s 2% estimates, citing a rebound in the global semiconductor industry.

The South Korean won strengthened to around 1,448 per dollar, extending gains for a second session, as signs of easing trade-policy risks lifted sentiment. Confidence improved after Seoul intensified diplomatic efforts to contain renewed trade tensions with Washington. In discussions with US trade officials and around 20 lawmakers, Trade Minister Yeo Han-koo reaffirmed plans to advance legislation underpinning the bilateral agreement and to engage on US concerns over non-tariff barriers, including digital regulations, while cautioning that higher tariffs would harm industries and growth in both economies. The renewed dialogue and signals of continued negotiation helped calm market jitters, reinforcing expectations that trade risks may ease rather than escalate. Alongside steady foreign inflows, this backdrop continued to support the won as investors reassessed downside risks to South Korea’s external outlook.