How do exchange rates affect overseas stock returns?
Compare dollar and won returns and learn what the currency selector does.
Dollar and won returns use different reference currencies
For an overseas stock bought and sold in dollars, both the dollar price and the KRW-per-USD exchange rate affect the won outcome. A dollar profit can become a smaller won profit or even a loss; a higher KRW-per-USD rate can increase the won return.
A 10% dollar gain can become about 1.54% in won
Investing USD 1,000 at KRW 1,300 per dollar costs KRW 1.3 million. If the holding rises to USD 1,100 but the rate falls to KRW 1,200, its won value is KRW 1.32 million. The won gain is KRW 20,000, or about 1.54%, excluding FX charges, trading costs and tax.
What if the exchange rate rises instead?
At KRW 1,400 per dollar, the same USD 1,100 is worth KRW 1.54 million: about an 18.46% gain on the original KRW 1.3 million. The changes combine multiplicatively, not by simply adding the two percentages. These exchange rates are illustrative, not current quotes.
The currency selector does not convert your money
Doug's compound, return and average-cost calculators support KRW and USD, but do not fetch FX rates or convert entered amounts. In USD mode, enter every monetary input in dollars. Switching an existing won input to dollars preserves the number and changes its denomination only.
Check taxable gains separately
Economic returns measured in won and taxable capital gains need not match. Do not use a dollar profit converted at today's single exchange rate as your filing figure. Check the broker's annual KRW capital gains statement and treatment of costs.
Sources and calculation assumptions
All figures are illustrative assumptions, not actual product returns or market quotes. Worked examples were calculated independently by Doug editorial.
Try it in a calculator
Calculate USD investment returns · Korean Overseas Stock Tax Calculator