Can I open a foreign currency account in Korea?
Foreign currency accounts, sometimes called multi-currency accounts, are available to you at your local bank in Korea. A foreign currency account is a useful account for organizing, saving, withdrawing, remitting overseas and receiving inward overseas remittances in several different currencies.
You can deposit and withdraw any foreign currency — except Korean won — whose interest rate is officially posted by your bank.
Most banks split their available currencies into two groups: major traded currencies and other traded currencies. Major traded currencies are available at virtually all banks; other traded currencies may not always be available at every branch. However, available currencies will always vary by bank.
Of special note is that while the Chinese yuan (RMB) may be available at your bank, the Chinese government controls the quantity and flow of the yuan very carefully, so the exchange rates are volatile and the availability can be unpredictable.
Foreign currency time deposits are also available. A time deposit is a useful savings product for those who would like to invest a lump sum in a foreign currency for a pre-determined term and earn a fixed interest rate over that period. The interest rate you earn would be based on the interest rate that is posted by that currency’s country, but other factors such as the supply and demand for that currency in Korea could also affect the posted interest rate.
Foreign currency accounts held by foreign residents are subject to strict federal regulations that are mandated by the Bank of Korea. All banks must follow these regulations on foreign currency accounts. These regulations prohibit direct transfers between foreign currency accounts and Korean won accounts. These regulations also prohibit transfers between foreign residents’ foreign currency accounts and the foreign currency accounts of Korean nationals. These regulations are in place to help the Bank of Korea manage and control the inflow and outflow of Korean won.
The cash handling fees that may be applied when making a deposit or withdrawal to or from your foreign currency account can be a little confusing. You are only required to pay cash handling fees once — either at the time of deposit or the time of withdrawal — and only when actual foreign currency (cash) is involved in a transaction. This is to cover the bank’s cost of holding foreign currency cash on hand.
Foreign currency accounts, including time deposits, are insured by the Korea Deposit Insurance Corporation (KDIC) under the Depositor Protection Act for up to and including 50 million won (or equivalent), including principal and interest, per person, per bank.
“Dear Michelle: Banking Advice for Expats” is a monthly column written by Michelle Farnsworth. Michelle is the Foreign Client Relationship Manager in the Shinhan Bank Foreign Customer Department. Please visit the “Shinhan Expat Banking" on Facebook for more information. The banking information provided in this column is based on Shinhan Bank policies and may not be applicable to all banks in Korea. — Ed.
Shinhan Bank Foreign Customer Department