South Korea's finance ministry stated on Wednesday that the country will persist in its efforts to be upgraded to developed market status by MSCI, following the index provider's decision to retain Asia's fourth-largest economy in the emerging markets classification.

Overnight, MSCI Inc announced that South Korea would remain an emerging market, citing the limited convertibility of the Korean won in offshore currency markets, despite the country's push for an upgrade.

In a statement, South Korea's Ministry of Economy and Finance expressed confidence that the nation can achieve developed economy status if it continues to advance its foreign exchange and capital market reforms at its own pace.

The ministry added that it will keep working to communicate with major overseas investors and incorporate their feedback into policy considerations.

MSCI Inc acknowledged that Korean market regulators have announced measures to address these long-standing concerns. However, the firm noted that investor feedback indicates the fundamental issues have not yet been fully resolved.

Simultaneously, MSCI Inc pointed out that the limited convertibility of the Korean won in the offshore foreign exchange market remains a key obstacle to reclassification.

A more significant concern, according to MSCI, is that domestic liquidity during extended foreign exchange trading hours remains insufficient to support the strict execution standards equivalent to those of developed markets. This limitation curtails the flexibility of index replicators and other institutional players in conducting foreign exchange transactions.