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South Korea expands KRW access, lifting prospects for offshore liquidity
Commerzbank said the plan, including unlimited KRW transactions from January 2027 for pre-registered foreign institutions, is aimed at lowering the risk premium despite potentially increasing KRW sensitivity to global risk sentiment.
Commerzbank analysts said South Korea has unveiled a new KRW internationalisation roadmap that follows the start of 24-hour FX trading in early July, with measures designed to improve foreign access and offshore liquidity.
Under the reforms, foreign investors will be allowed to conduct unlimited KRW transactions with pre-registered foreign institutions from January 2027. The changes are also set to remove reporting requirements for most transactions and eliminate the need for foreigners to open KRW accounts in South Korea.
The analysts said the main benefit is likely a lower risk premium and improved access to South Korean assets, while deeper offshore liquidity could help support larger investment and repatriation flows without excessive FX volatility.
As the package was announced, USD/KRW fell to 1,478, with the move attributed to exporter-driven dollar selling, Commerzbank said, while also noting that greater internationalisation may heighten KRW sensitivity to global risk sentiment.