The won-yuan exchange market has been opened for the first time. Korea is now the third nation to have an offshore direct exchange for the yuan, following Russia and Japan.

With the start of won-yuan trades on December 1, local banks can now change their won into yuan directly. In the past, they had to change won into U.S. dollars first, and then from there go into the yuan. By simplifying the exchange process, Korea-China trade is expected to become easier and less costly.





"In addition to the opening of a clearinghouse, direct won-yuan exchanges are part of key infrastructure improvements that will boost won-yuan trade," said Deputy Prime Minister and Minister of Strategy and Finance Choi Kyung-hwan.

"The direct exchange will make it easier to trade yuan and will reduce related costs, which will, again, act as a catalyst to boost overall yuan trade."

"The won-yuan direct currency exchange can be thought of as a startup with great potential," said Choi. "We will develop this startup so that it becomes an internationally competitive 'Hidden Champion.'"

The launching of direct won-yuan trades is a result of an agreement made between Korea and China in July. An electronic trading system similar to the existing won-dollar exchange system has been set up and 12 commercial banks in both Korea and China have now been designated by their governments as market makers to boost won-yuan trade.



The won-yuan exchange market opens at 9:00 a.m. and closes at 3:00 p.m., similar to the won-dollar market. The minimum amount per trade is set at CNY 1 million, or about KRW 180 million.

Beginning direct won-yuan trades is expected to help Korea become a yuan-trading hub and to overcome external shocks by diversifying currencies traded in the country. When more trades are settled in yuan and financial exchanges with China expand further, won-yuan exchanges between banks is expected to grow, as well.

By Limb Jae-un
Korea.net Staff Writer
Photos courtesy of the Ministry of Strategy and Finance
jun2@korea.kr