South Korea to ease FX rules for foreigners to trade won in push to liberalise forex market

Published Sun, Jul 19, 2026 · 12:51 PM

SOUTH Korea laid out a detailed plan to make the won freely tradable among foreigners, its boldest step yet to liberalize the forex market and bring the currency closer to full convertibility.

The measures announced on Sunday (Jul 19) will allow foreign investors to conduct unlimited won transactions through foreign firms pre-registered with the government, eliminating the need to open won accounts in South Korea from January 2027, the finance ministry said in a joint statement with the central bank and regulators.

Won transfers between foreigners using the new channel will be exempt from advance reporting for most capital transactions, except domestic real estate, with banks required to verify only basic account information from September, according to the statement. 

The settlements will be processed through a new 24-hour Bank of Korea network, which will start pilot operations in September ahead of full implementation in 2027.

South Korea will also consider ways to support foreign banks’ local branches in carrying out night time operations and introduce incentives in September to shift trading from non-deliverable forwards to deliverable forwards.

The regulatory easing will more than double reporting thresholds for capital transactions such as won lending to foreigners, while simplifying verification procedures for won transactions at foreign-exchange banks.

Bolstering won’s global use

The changes mark a significant shift for a country that has long maintained tight controls on its currency despite being Asia’s fourth-largest economy and a major exporter. They also bring South Korea a step closer to the standards expected of developed financial markets as policymakers seek to attract global investors and bolster the won’s global use.

The steps also build on the launch of 24-hour won trading earlier in July, which for the first time allowed overseas investors in New York to transact during their own business hours.

Together, the reforms would let non-residents not only trade the won around the clock but also transfer and settle the currency directly among themselves outside South Korea, underscoring the government’s desire to internationalise the currency.

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The package represents the clearest break yet from exchange-rate policies shaped by the Asian financial crisis in 1997 and the global financial crisis in 2008, when authorities prioritised capital controls and financial stability over market openness. 

The restrictions on foreign exchange trading have long been cited by MSCI as one of the main obstacles preventing South Korea from being upgraded to developed-market status. A more freely usable won could also make South Korean assets more attractive to global reserve managers, pension funds and other institutional investors that prefer currencies with fewer operational constraints.

“The point is to lay a dedicated road so that foreigners can more easily deposit and hold won, or use it for payment, settlement, funding, investment and transfers,” Kim Hee Jae, a director of the Finance Ministry’s international finance division, said at a briefing.

Transactions that bypass the channel remain under the existing Foreign Exchange Transactions Act, though those rules are being eased too, Kim added.

As part of the roadmap, the government also unveiled measures aimed at deepening offshore demand for the won. The measures will permit securities lending of South Korean treasury and monetary stabilisation bonds between foreign investors through international central securities depositories, including Euroclear and Clearstream.

The measures will also expand foreign central banks’ and international institutions’ access to the interbank repo market and allow non-residents to invest idle won in short-term instruments. The government will also study incentives for settling trade in won.

To support liquidity, South Korea plans a two-tier funding backstop for overnight markets, with foreign-exchange banks providing overdrafts for foreign investors before the Bank of Korea considers additional support. The foreign-exchange stabilisation fund may also be tapped until the central bank’s settlement network is fully upgraded.

Pressing ahead with liberalisation

The reforms come after a volatile period for the South Korean currency. The won was Asia’s worst-performer in the first half of 2026, sinking on Jun 6 to its weakest level since the global financial crisis in 2009. Authorities have nevertheless pressed ahead with liberalisation, arguing South Korea’s stronger external balances and deeper financial markets have reduced the risks that once justified strict capital controls.

South Korea has matured considerably in both current account and capital transactions, said Lee Hyoung Ryoul, director general for international finance at the finance ministry. 

“Rather than being at a stage of worrying about the side affects, like a currency crisis, we’ve judged the time has come to shift policy toward capturing the benefits of internationalisation to the fullest,” he said. BLOOMBERG