[Anchor]

Starting tomorrow, July 6, the won-dollar foreign exchange market will be open for trading 24 hours a day.

In this segment of Money Move, reporter Lee Tae-gwon explains what will change and who will be affected.

[Reporter]

Starting tomorrow, domestic and foreign financial institutions, foreign investors, and import-export companies will be able to trade won-dollar pairs 24 hours a day, excluding weekends and January 1.

For individual currency exchange, services will be rolled out sequentially, starting with financial institutions that have established the necessary systems.

What will change once the foreign exchange market operates around the clock?

Previously, currency exchange was already possible 24 hours a day through bank or brokerage apps.

However, during hours when the market was closed, exchanges were made at a provisional exchange rate that was about 5 percent higher, with the actual rate settled once the market opened.

For example, if a domestic investor wanted to buy 20 shares of a U.S. stock worth 100 dollars each at 3 a.m., and the market exchange rate was 1,500 won, they previously had to have 3.15 million won on hand because they had to exchange at a 5 percent higher rate of 1,575 won.

But now, they can invest with just 3 million won by applying the real-time exchange rate.

What about export companies that receive dollar payments in the early morning hours, Korea Standard Time?

If they expect the exchange rate to fall, they can exchange their currency immediately to manage the risk of loss.

Also, if major news from the United States overnight is reflected in real-time, the shock to exchange rates can be reduced.

[Interview: Kang Hyun-ju, Senior Research Fellow at Korea Capital Market Institute]
"Since we will be covering the entire New York market, situations that could not be fully reflected in the domestic foreign exchange market can now be absorbed during trading hours..."

As the convenience of currency exchange for overseas investors and financial institutions increases, it will also help in being included in the MSCI developed market index, which serves as a benchmark for global investors.

However, because trading volume may be low during late-night hours, there is a possibility that prices could spike due to specific orders.

Experts point out that measures to secure liquidity, such as incentives to vitalize night trading, must be implemented in parallel.

(Video Editing: Park Na-young, Design: Im Chan-hyuk)