Market News

Daedo Kim and Hooyeon Kim, Bloomberg News

, Seoul Money Brokerage Services, Korea Money Brokerage Corp

(Bloomberg) -- Liquidity in the South Korean won dropped during late-night hours in the first week of extended trading, a potential setback for officials keen to bolster the market and heightening the risk of big price swings just as global investors gain more access.  

While activity in dollar-won spot off sharply, overall volumes were roughly in line with the first half of the year, with a daily average of $10.97 billion for the week ending July 5, according to data from the Seoul Money Brokerage Services and Korea Money Brokerage Corp. 

Kim Hee Jae, director of the finance ministry’s currency market division, said it was too early to judge whether the transactions were low or not. 

“The start of summer vacation season and last week’s US holiday” on July 4 were factors contributing to the drop in volumes, he said. 

Korea has sought to make its currency easier to trade to facilitate the inclusion of its stocks and bonds in global indexes. Trading hours were extended to 2 a.m. from 3:30 p.m. as of July 1, and local banks have implemented night shifts as part of the new regime. 

Authorities vowed to intervene and take timely market-stabilizing measures in case of excessive price swings. They have also encouraged local banks and financial companies to actively participate in trading during the extended session. 

“The market is probably still adjusting to it,” said Shaun Lim, a currency strategist at Malayan Banking Bhd.