Expanding Market Access and Reducing Volatility

The South Korean government has announced plans to open a nighttime treasury futures market starting June 2025. This initiative, spearheaded by Minister of Economy and Finance Choi Sang-mok, aims to align with global trading hours, thereby increasing market accessibility and reducing volatility. The move follows the inclusion of the Korean bond market in the World Government Bond Index (WGBI) this year, reflecting global investors' trust in Korea's economic policies.

Choi emphasized the significance of this development, stating, "The inclusion in the WGBI is the result of global investors' trust in our consistent capital and foreign exchange market advancement policies over the past two years, based on our solid economic fundamentals and high national credit rating." He added, "This has resolved the chronic Korea discount in the bond and foreign exchange markets, and our treasury bonds have finally succeeded in receiving fair value commensurate with the size of our economy."

In addition to the nighttime futures market, the government plans to introduce a new five-year maturity personal treasury bond next year. Vice Minister Choi mentioned, "We will use the WGBI inclusion as a stepping stone for our treasury bond market's leap forward and issue green bonds." He further elaborated, "We also plan to pursue various tasks for the development of the treasury bond market, such as introducing a new five-year maturity personal investment treasury bond."

Meanwhile, the Ministry of Economy and Finance announced that it successfully issued foreign exchange stabilization bonds denominated in Australian dollars. The issuance amounted to 450 million Australian dollars (approximately 410 billion won) and was entirely of a single type with a five-year maturity. The issuance interest rate was 4.51%, which is the base rate of 3.96% for Australian dollar bonds plus an additional 55 basis points. A Ministry of Economy and Finance official highlighted the significance of this achievement, stating, "This issuance interest rate is 24 basis points lower than the previous record low, and it is significant in that it has diversified foreign currency procurement channels despite global uncertainties."

The government also plans to increase liquidity by reissuing bonds with short remaining maturities and prevent market shortages by timely utilizing treasury bond exchanges and regular buybacks. A ministry official explained, "(Expanding the futures market) will allow effective management of volatility triggered in overseas markets and help global investors access treasury derivatives."