Read time: 1 min

Korean FX Liberalisation Plan Brought Forward

The implementation of Korea’s on-going foreign exchange liberalisation has been brought forward two years to promote the country as a regional financial hub, according to a statement by the country’s Ministry of Finance and Economy, (MOFE).

The Ministry’s plans are summarised as a three-prong approach including “facilitating the won’s internationalisation; liberalising foreign exchange transactions including the Korean nationals’ overseas investment; and advancing the foreign exchange market”.

Squawkbox reported on the relaxation of several FX rules in March this year (see Squawkbox, March 13), but MOFE says it has now brought forward completion of its full liberalisation plans to 2009 from 2011, with the first phase to be implemented this year.

With effect from May 22, various regulatory ceilings on FX transactions by Korean nationals, foreign investors and financial institutions have been lifted to enable more international investment and trade related flow of won while withholding taxes have been lowered.

The government’s move to liberalise its FX market comes as the country emerges as an economic powerhouse in the region. Its $918 billion GDP is the third largest in Asia after Japan and China and is just smaller than Canada’s $1,262 billion, according to Economist Intelligence Unit data. Its $441 billion stock market is Asia’s second largest after Australia on a free float basis, according to S&P data, and is almost double that of Hong Kong’s.

The country’s FX market saw record volumes of $10 billion daily in first quarter 2006, up 23% from a year ago (Squawkbox, May 2, 2006).

Profit & Loss

Share This

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on reddit

Related Posts in