December 01, 2014 12:20
Monday sees the long-awaited opening of direct trading of the Korean won into yuan and vice versa, according to the Bank of Korea.
So far the won could only be directly changed into U.S. dollars, but direct trading of the yuan was apparently made possible to reduce heavy dependence on the dollar.
The exchange market opens on weekdays at 9 a.m. and close at 3 p.m.
Banks buy and sell foreign currency for businesses or individual clients. But there had been no market here that traded directly into the Chinese currency, so banks had to go through the rigmarole of exchanging won into dollars in the local forex market and then exchanging them again into yuan either in Hong Kong or other overseas markets, losing money at every step.
China's Bank of Communications will be the primary financial institution handling the trading.
Last year, Korea's trade with China reached US$229 billion, compared to $215.8 billion in 2012. Korea achieved a $53.6 billion surplus. That may seem a lot, but critics say an even bigger surplus is needed if the won-yuan direct trading market is to succeed.
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