Emerging Markets Rates and Currencies Handbook

18 Citi | Emerging Markets Currencies Handbook 2021 SOUTH KOREA (KRW — South Korean Won) Citi in South Korea Citi was one of the first foreign banks to have a presence in Korea, commencing operations in 1967. It now has a significant local presence, with extensive corporate clients and a full-scale consumer franchise in Korea. Citibank Korea Inc. (CKI) was formed on November 1 2004, after the acquisition of KorAm Bank. Citibank in Korea now has 44 branches nationwide, serving 4.5 million customers. The bank has more than 1,000 ATMs in service and is one of the largest credit card issuers in Korea. Market Overview The Bank of Korea (BOK) oversees a floating exchange rate regime and intervenes occasionally to smooth excess volatility. The KRW is partially convertible, with the offshore being available only on a non-deliverable basis. Both the onshore and offshore markets are liquid with an estimated daily turnover of USD 10bn for onshore spot and USD 8bn offshore NDF (of trades with domestic foreign exchange banks, including ND swaps). 17 local banks, 38 foreign banks and a few securities companies participate in the FX market of Korea through an interbank market or foreign exchange brokerage firms. Korea has two direct dealing markets: USDKRW and CNHKRW, with USDKRW being the most traded currency pair. The onshore CNHKRW direct trading market was launched in December 2014 and its daily transaction volume is around USD 2bn. Rates market is developed backed by Korean Treasury market which is the largest in Asia ex-Japan. IRS, FRA and Options are fulfilling hedge and investment demand for participants with USD 8.5bn daily volume. From 2014, IRS between financial investment firms should be cleared through KRX CCP. Convertibility Convertible onshore with some restrictions. Korea allows the repatriation of approved capital, as well as the remittance of dividends and profits. However, FX banks conducting business with foreign investors must verify the legitimacy of such transactions. Some controls and reporting requirements on payments by businesses remain in place.