By Jihoon Lee and Yena Park
SEOUL -South Korea’s finance minister will lobby for the country to be included in the Morgan Stanley Capital International (MSCI) developed market index when he meets the index provider next week, he said on Tuesday.
“Inclusion in the developed market index is necessary and already overdue,” Hong Nam-ki said at a news conference with foreign media in Seoul.
Hong said the won – currently at around 1,230 to the dollar – is at one of the weakest levels he has ever seen and that the government is ready to deploy market stabilizing measures if needed.
Asia’s fourth largest economy is seeking inclusion on an MSCI watchlist by June.
The absence of an offshore currency market for the won has been one of the main obstacles South Korea has faced in its efforts to be promoted from the MSCI emerging market index to the developed market.
The outgoing finance minister said some of the measures on the table for discussion would be extending trading hours and allowing overseas FX dealers to participate in the market, but he did not provide further details when asked.
Currently, onshore trading hours are 00:00 GMT to 06:30 GMT and only locally licensed financial institutions can participate.
Asked whether further opening up the USD/KRW spot market could increase volatility at a time when rising interest rates and the Russia-Ukraine conflict are adding to uncertainties, Hong said those are obstacles the country needs to cope with.
“There are concerns over opening up the FX market for 24 hours, but we will have to bear what we have to,” Hong added.
The won’s one-month contract jumped to as high as 1,227.4 per dollar in non-deliverable forward (NDF) trading immediately after Hong’s comments were released at 0630 GMT, strengthening 0.72% from its onshore spot market close of 1,236.2.
(Reporting by Jihoon Lee and Yena Park; Editing by Tom Hogue and David Holmes and Kirsten Donovan)
