Ways to Invest in Dollars from Korea: Foreign Currency Deposits, Dollar ETFs and US Treasuries Compared by Exchange Rate and Tax

What a dollar investment bets on

When someone holding won buys dollars, returns come from two places: currency gains when the dollar-won rate rises, and interest from putting those dollars in deposits or Treasuries. If the rate falls, you can lose money in won even after collecting interest. So investing in dollars is essentially a bet that the won will weaken against the dollar, and at the same time a way for someone with only won assets to diversify. Many hold dollars as a kind of insurance because the won tends to weaken in crises, but the premium is the conversion cost, the gap with won interest rates and the losses when the rate falls.

Start with conversion costs

Banks post a base rate each day and price dollars above it when customers buy and below it when they sell. The cash rate for banknotes has a wider gap than the transfer rate for moving money between accounts. Currency 'preferential rates' at banks and brokers knock a percentage off this gap, so the actual cost varies widely with the discount. Buying dollars and selling them back means paying the cost twice, so you profit only after the rate has risen by that much. The shorter you hold, the more conversion costs eat into returns, just as with stock trading costs. Comparing the market rate shown by the Today's Exchange Rates tool with a bank's posted rate gives a feel for it.

Foreign currency deposits

The simplest route is a dollar deposit at a bank, either demand or time deposit. Interest has 15.4% withheld, as with won deposits. Currency gains from a rising exchange rate are not interest income and are described as untaxed. Foreign currency deposits are covered by deposit insurance, protected together with interest up to 100 million won per person per institution in won terms (from 1 September 2025; previously 50 million won). Withdrawing dollars as banknotes often carries a fee, and dollar interest rates follow the US policy rate, so they can be higher or lower than won deposit rates.

• Interest: 15.4% withheld
• Currency gains: described as untaxed
• Deposit insurance: 100 million won per person per institution, including interest
• Check fees for withdrawing dollar banknotes

Dollar RPs, notes and money market funds

Brokers sell short-term dollar products such as repurchase agreements (RPs), broker-issued notes and foreign currency money market funds. They are popular for parking dollars converted to buy overseas stocks, and sometimes pay slightly more than foreign currency deposits. Interest or returns have 15.4% withheld, and since they are not deposits, they are not covered by deposit insurance. You are taking on the credit risk of the broker or the underlying assets, so check who issues the product and what it invests in, not just the rate.

Dollar ETFs

ETFs tracking dollar futures, which invest in exchange-rate moves, are listed on the Korean exchange and trade from a stock account. Gains count as dividend income with 15.4% withheld and are included in financial income, and they can be held in tax-advantaged accounts such as pension savings and ISAs. There are also leveraged versions that move twice as much as the rate and inverse versions that move the opposite way; because these reset their multiple daily, holding them for long tends to produce results different from what you expect. You can also buy very short-term US Treasury ETFs listed in the US with dollars, but then gains face 22% capital gains tax after the 2.5 million won deduction, as with foreign shares, and US tax may apply first to distributions, so check each product.

US Treasuries

You can also buy US Treasuries directly through a broker. Held to maturity, they pay set interest and principal in dollars, but the result in won depends on the exchange rate at maturity. Sold early, their price depends on interest-rate moves, so after rates rise you may sell at a loss; the longer the maturity, the bigger these price swings. Korean residents pay interest income tax on the coupons and must count them in financial income. Individuals' gains from selling bonds are generally described as untaxed, but this can depend on the product structure, so check your broker's guidance.

Why exchange rates move, and what cannot be known

The dollar-won rate moves under several overlapping forces: the interest-rate gap between Korea and the US, trade and the current account, foreign flows into Korean stocks and bonds, and demand for dollars when the world economy is shaky. It approached 2,000 won in the 1997 Asian financial crisis and reached the 1,500s in the 2008 financial crisis, and there have also been periods around 1,000 won. Plausible explanations are always on offer, but no known method reliably predicts the rate a few months out. So rather than setting a large dollar position all at once, a common approach is to fix the share of dollar assets in the whole portfolio, buy in instalments or rebalance periodically. Anyone holding overseas stocks should also count the dollar assets they already have.

Checking with this site's tools

The Today's Exchange Rates tool shows won rates for 16 currencies, including the dollar, yen and euro, from international foreign-exchange quotes, with charts from five-minute bars to the full history, changes from one week to ten years, and a converter. It shows market rates rather than bank posted rates, so check bank or broker rates and discounts when actually converting. The Currency Calculator converts amounts instantly, and the Global Markets & FX at a Glance tool shows exchange rates alongside US Treasury yields and indexes. The correlation tool shows how closely the dollar-won rate has recently moved with KOSPI, the Nasdaq and gold.

Limits and disclaimer

The tax and deposit insurance details here summarise laws and general guidance from financial firms as of October 2026; conditions and taxation can differ by product, and rules can change. No one can know in advance where exchange rates and interest rates will go, and dollar assets can lose money in won terms. Read the product documents and your financial firm's guidance before signing up. This guide explains how the methods are structured; it does not recommend buying dollars or any product and is not investment advice.