Holding Foreign Currency in a Korean Bank Account

Holding foreign currency in Korea and sending money out of Korea are two different financial acts, and conflating them is where most guidance goes wrong.

A foreign currency deposit is simply foreign money — dollars, euro, yen, renminbi — sitting in a Korean bank account. You might hold it to avoid having every asset denominated in won, or to accumulate currency ahead of tuition abroad, an overseas payment, or an import bill.

The reporting, limits and evidence around actually sending money abroad are a separate foreign exchange payment procedure and are not covered here. For that, see sending money from Korea abroad; for the wider picture of exchanging, spending and moving money, see managing money in Korea.

Two spreads, one interest rate. Count all three before comparing anything.

Nationality is not the test. Residency is — and there are two of them

The Foreign Exchange Transactions Act governs foreign exchange dealings in Korea, and it does not shut foreign nationals out of foreign currency deposits.

What it does care about is whether you are a resident or a non-resident under that Act. The Foreign Exchange Transactions Regulations run residents’ and non-residents’ foreign currency funds through different account structures, and an individual foreign resident has their own foreign currency deposit account type available.

So holding an Alien Registration Card and living here a long time does not automatically place you in one category. The bank looks at your actual period of stay, your Korean address, your residence status and your position under the Act, and sets the account type from that.

Opening one normally means an Alien Registration Card or domestic residence report certificate, a passport, and a Korean address and contact number — with more requested depending on the purpose of the dealing and where the money came from. Foreign currency deposits sit inside the customer due diligence and anti-money-laundering regime like anything else, so a large cash deposit or an inbound overseas transfer can bring a source-of-funds check with it.

Demand or time: the choice is about when you need it

A foreign currency demand deposit holds what you converted and lets you take it back to won, or use it for another currency dealing, whenever you want. The rate is often unremarkable, but there is no maturity, which is what makes it the right place to build a position in stages.

A time deposit locks currency for a term at that currency’s contracted rate. Currencies with higher international market rates — the dollar being the obvious one — can pay quite differently from a won deposit at the same bank. As of August 2026, KB and Woori were publishing pre-tax rates around 3% a year on USD foreign currency time deposits, varying by term.

Which is not the return. Take 3% interest and then watch the currency fall 10% against the won, and the won value of the asset has gone down. A foreign currency deposit is a deposit product and a currency position at the same time, and only one of those two things is advertised.

The four big banks differ by currency, not by a single minimum

The major commercial banks do not offer the same foreign currency lineup, and the differences that matter are the currencies covered and the individual product terms.

The spread is the first number to work out, not the last

The rate you are shown as the market rate and the rate you actually transact at are not the same. The bank works around a mid-market rate and applies one rate when selling you currency and another when buying it back. That difference is the spread.

A mid-market rate of ₩1,350 to the dollar does not mean you can buy a dollar for ₩1,350. The bank’s telegraphic transfer selling rate, and its cash selling rate, both carry the spread.

And “90% FX preference” does not mean 90% off the exchange rate. It means 90% off the spread the bank is charging. Your real acquisition cost is:

For a position you intend to hold, converting a fixed amount at intervals rather than the whole sum on one day spreads the entry price. Planning to hold USD 10,000 is not a reason to buy USD 10,000 today. This is not a strategy that improves returns — it reduces the risk of having bought the entire position at one particular rate.

Notes and electronic conversion cost different amounts

Having a foreign currency account does not make paying banknotes in and out of it free. Handling physical currency costs the bank transport, storage and exchange, so a cash handling fee can apply on deposits and withdrawals of notes.

Currencies other than the dollar tend to be worse on this, and some branches do not handle certain notes at all.

Converting electronically from your won account through internet or mobile banking and crediting the foreign currency deposit skips the cash handling entirely. If the point is holding an asset rather than carrying notes, the electronic route between your won and currency accounts is the simpler cost structure by a wide margin.

Interest is taxed. The currency gain is a different question

Income tax law treats interest on a deposit received in Korea as interest income. For an individual resident, ordinary withholding on deposit interest is 15.4% — 14% income tax plus 1.4% local income tax — taken before the interest is paid out. Earn USD 1,000 of interest on a dollar time deposit and what arrives is the after-tax figure.

Do not extend that automatically. As above, tax residency is its own test: a tax non-resident’s Korean deposit interest is domestic-source interest income, where tax treaty provisions and separate withholding rules have to be looked at. A deposit in a company’s name is not described by the individual 15.4% structure either — corporate interest income belongs inside the corporate tax computation.

The gain from the currency itself is a separate matter again. An individual who buys dollars at ₩1,300 and converts back at ₩1,400 has made an ordinary currency gain from holding foreign money, and that is not taxed the way deposit interest is.

But avoid the sentence “FX gains are tax-free.” A product that combines a deposit with forwards or swaps to manufacture what is in substance interest can be classified as interest income under the Income Tax Act. And translation gains and losses on a business’s foreign currency receivables and payables, or a company’s realised FX gains and losses, follow completely different treatment from an individual holding currency. Keep the individual case and the business case apart.

Protection is ₩100,000,000, and it is added up per bank

Where the product is a protected deposit under the Depositor Protection Act, a foreign currency deposit is covered like any other.

Since 1 September 2025 Korea’s protection limit has been ₩100,000,000 per person per financial institution, principal plus stipulated interest — double what it was before. A foreign currency deposit’s protected amount is worked out by converting to won at the rate applied when the insured event occurs.

The part that catches people: it is per institution, and protected deposits inside one institution are added together. Holding ₩70,000,000 in won deposits and ₩50,000,000 worth of protected foreign currency at the same bank does not give you two separate ₩100,000,000 protections.

Building the position, in order

Money you will need for won living costs in the near future does not belong in a foreign currency time deposit. Living expenses in won, money earmarked for overseas spending in a foreign currency demand deposit, and currency with no scheduled use in time deposits is the division that survives contact with an actual month.

A sole proprietor should keep personal and business foreign currency accounts clearly apart, and a company should never run overseas purchase or export proceeds through the same account as the representative director’s personal currency holdings.

And the moment the currency actually leaves Korea, this stops being a deposit question and becomes a foreign exchange payment one — which is a different procedure entirely.