FX regulations still pose obstacle for Seoul's financial hub push

HONG KONG (Yonhap) -- Korea's foreign exchange regulations could still be an obstacle to the country's capital becoming a leading financial hub, a high-ranking Goldman Sachs official said Wednesday.

"Complex foreign exchange regulations are one of Seoul's weaknesses," said Simon Hurst, managing director at Goldman Sachs' Seoul operation, although he acknowledged that Seoul has a strong and resilient financial system.

He was giving a speech at the 2012 Financial Hub Seoul Conference held in Hong Kong.

The country's control on holding of currency is often cited by financial officials in Hong Kong as a difficulty for foreign financial institutions operating in Korea.

"Those who try to bring foreign currencies into the country need to go through a long regulatory process," said a financial source here, requesting anonymity.

"Also, making transactions in currencies other than the U.S. dollar and the Korean won is almost impossible," he claimed.

However, South Korean authorities said the country's foreign exchange regulations do not limit foreign firms' activities.

"We need some regulations, as, without them, foreign investors will see an increased volatility in Korean capital markets," Choi Soo-hyun, first senior deputy governor of the Financial Supervisory Service told reporters.

"South Korea has already taken necessary steps to ease regulations to help foreign financial institutions operating in the country, in such a way as to allow them to report rather than to get approval on the amount of foreign currencies they are using."