Foreign currency accounts are now a staple of South Korean banking as demand for dollar‑denominated services rises alongside a rebound in overseas travel and growing interest in U.S. equities.
Account numbers surge as travel cards gain popularity
Data released on Wednesday show that the five largest Korean lenders—KB Kookmin, Shinhan, Hana, Woori and NH NongHyup—recorded a combined 12.88 million individual foreign currency accounts in the second quarter. That figure is almost double the 7 million accounts reported at the end of 2023, indicating a shift from niche products once limited to wealthy clients and students studying abroad.
The expansion is closely tied to travel cards, which let users preload foreign currencies and make overseas payments or cash withdrawals with minimal exchange fees. Most of these cards are linked directly to foreign currency accounts, turning what used to be a specialty service into a routine banking tool.
Korea’s outbound travel continues to recover. The Korea Tourism Organization logged 8.34 million overseas trips in the first quarter, a 7.1 percent rise from a year earlier. Correspondingly, overseas card spending by Korean residents hit a record $6.1 billion during the same period, up 14 percent year‑on‑year.
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Hana Financial Group’s Travelog, the nation’s largest travel card service, reported 11.17 million users as of last month—roughly twice the number seen two years prior.
Cumulative foreign‑exchange transactions through the platform have exceeded 7 trillion won.
Investment in U.S. stocks fuels dollar‑holdings
Retail investment in U.S. equities also contributes to the rise in foreign currency accounts. Korean investors need to hold and transact in U.S. dollars to purchase shares, receive dividends, or manage sale proceeds. Many keep their dollar balances in these accounts rather than converting back to won.
At the same time, the Korean won’s prolonged weakness against the dollar since 2022 has prompted some consumers to treat foreign currency accounts as a hedge, using them for modest currency‑investment strategies.
Despite the surge in account openings, total balances in individual foreign currency accounts fell 9 percent from the fourth quarter of last year to $12.7 billion in the second quarter. The average balance per account dropped 12.8 percent year‑on‑year to about $986. This suggests growth is being driven by widespread everyday use rather than large dollar holdings.
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Industry officials note the divergence between rising account numbers and falling balances reflects the shift toward using these accounts for travel, overseas investing and routine foreign‑exchange transactions, rather than as vehicles for sizable dollar investments.
For the average Korean traveler, the convenience of loading a travel card with dollars and avoiding exchange fees can mean a smoother trip abroad, especially when the won remains volatile. Similarly, a modest investor in U.S. stocks can keep dividend payouts in a dollar account without the hassle of frequent conversions, aligning the financial product with everyday needs.
Banks appear poised to keep expanding travel‑related offerings, while the broader economic backdrop—particularly the won’s exchange rate—will likely continue to influence how consumers balance domestic and foreign holdings.
The trend will likely persist.
