Following the launch of 24-hour non-stop foreign exchange trading for the Korean won two weeks ago, the currency's daily transaction volume has seen a marked increase, driven by ongoing foreign investor sales of shares in South Korean domestic chip companies.

Data from Seoul Money Brokerage Services Ltd. and Korea Money Brokerage Corp. shows that the average daily trading volume for the USD/KRW spot exchange rate from July 6 to July 16 was approximately $18.6 billion. This figure is about 16% higher than the average daily volume for the 30 days preceding the implementation of full-day trading on July 6. The statistics do not differentiate between daytime and nighttime transactions and exclude July 17, a market holiday in South Korea.

South Korean authorities had previously anticipated that round-the-clock trading would boost the won's transaction volume, a prediction confirmed by this data. Expanding the foreign exchange trading window is a key initiative in South Korea's bid to secure a developed market status from MSCI. The new trading hours break a decades-long regime of strict foreign exchange controls but have also raised market concerns. The relatively weaker liquidity during nighttime hours could potentially exacerbate exchange rate volatility. The won's depreciation in early July, falling to its lowest level since 2009, has amplified these concerns.

Wee Khoon Chong, a senior market strategist for Asia Pacific at BNY Mellon, stated that two core metrics for measuring the success of the 24-hour foreign exchange trading system are whether after-hours trading volume can sustain growth and whether bid-ask spreads can narrow.

South Korea extended the won's foreign exchange trading hours from 17 hours per day to a full 24-hour cycle, aiming to enhance convenience for overseas investors trading the won. However, investors still need to place their trading orders through domestic banks within South Korea, though these orders can now be processed at any time of day.