Seoul: South Korea will continue its push for inclusion in the developed-market category under the Morgan Stanley Capital International (MSCI) index after the provider decided to keep Asia's No. 4 economy in the emerging-market category, the finance ministry said Wednesday.
According to Yonhap News Agency, MSCI announced that South Korea will remain in the emerging-market category despite Seoul's efforts to gain inclusion in the developed-market category. The decision was based on the limited convertibility of the Korean won in the offshore currency market.
"If we continue to implement reforms in the foreign exchange and capital markets on our own schedule, we believe we can be included among advanced economies," the Ministry of Finance and Economy stated. The ministry emphasized its commitment to ongoing communication with major overseas investors and integrating their feedback into national policies.
MSCI acknowledged the steps taken by Korean market authorities to address persistent issues but noted that investors have indicated these concerns have not been fully resolved. The finance company highlighted the limited convertibility of the Korean won in the offshore currency market as a significant obstacle to South Korea's reclassification.
Additionally, MSCI pointed out that onshore liquidity during extended FX trading hours remains insufficient for maintaining tight execution at standards seen in developed markets. This limitation affects FX operational flexibility for index replicators and other stakeholders.