[One Month Into the War, PB Investment Strategies]① The 1,500 Won Exchange Rate Era: RIA Launched—Assessing Its Effectiveness on the Ground

Opening Accounts and Timing Sales... "Currently Comparing and Reviewing Opportunity Costs"

Key Factors: Confidence in the Domestic Market and External Variables Such as War

High-Net-Worth Clients to Assess Effectiveness Before Repatriating F

Editor's Note
It has been well over a month since the Middle East war began with the U.S. and Israeli airstrikes on Iran. The international financial markets and economies around the world have been cast under a long shadow. The KRW-USD exchange rate, which appeared to be stabilizing in the low 1,400 won range before the war, has continued its upward climb, fluctuating above 1,500 won as international oil prices have soared. The supply-demand issues that stirred the market last year seem to have quieted under the weight of the Middle East crisis, but they remain unresolved challenges. Against this backdrop, the official launch of the “Repatriation Investment Account (RIA)” marks the first step toward improving the high exchange rate situation, and a full-fledged marketing competition has begun. We listened to the responses and effectiveness of the RIA, as well as future outlooks for the foreign exchange market and investment strategies, by interviewing nine private bankers (PBs) from the nation’s five major banks, who are closest to the voices on the ground.

"We are receiving a steady stream of inquiries and visits from clients who want to open accounts in advance and time their sales."

"High-net-worth individuals are still in the stage of comparing and reviewing practical benefits. However, many believe the conditions are stricter than expected."

"Ultra-high-net-worth individuals are largely uninterested. Their portfolios are already so substantial and their currency asset allocation is complete."

This was the atmosphere reported by nine private bankers (PBs) from the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup—following the launch of the Repatriation Investment Account (RIA) on March 23. As of March 29, the PBs agreed that, amid growing volatility in domestic and overseas markets due to the prolonged Middle East crisis, more clients are weighing whether it is more profitable to repatriate funds for more than one year, especially given the exchange rate fluctuating around 1,500 won and diverging investment outlooks for both markets.

The RIA is a scheme that offers tax benefits for investing for more than one year in domestic stocks with funds from the sale of overseas equities. The maximum amount that can be sold per person is 50 million won. The capital gains tax reduction rate is 100% if the sale occurs by the end of May, 80% by the end of July, and 50% by the end of the year. However, there is a one-year holding requirement after deposit, and if additional overseas stocks are purchased during this period, the benefits may be adjusted. This makes the calculations more complex for investors.

An employee is organizing US dollars at the Counterfeit Response Center of Hana Bank in Jung-gu, Seoul. Photo by Yonhap News.

Opportunity Costs Between Domestic and Overseas Markets, Middle East Crisis Variables... Considering Whether and When to Repatriate

PBs on the ground have identified two major concerns among investors. The first is the “opportunity cost” between domestic and overseas markets. While capital gains tax reductions are important, investors are ultimately focused on which market can yield better returns. Park Taehyung, PB Branch Manager at Woori Bank TCE Signature Center, analyzed, “Even with tax benefits, if clients lack confidence in the domestic market, they are unlikely to act. Clients with a high proportion of overseas stocks are especially keen to minimize opportunity costs, considering the potential for continued rallies in U.S. AI and big tech sectors.”

The second concern is the significant uncertainty about market direction due to external variables such as war. Choi Kyungmin, WM Specialist at NH NongHyup Bank, stated, “While demand for opening RIA accounts is high, the increased volatility stemming from geopolitical risks means the timing of entry is under careful consideration.” Lee Yunmi, Gold PB Director at Hana Bank Pyeongchang-dong PB Center, also pointed out, “The preference for safe assets due to the prolonged war could become a variable limiting the repatriation of RIA funds.”

With exchange rates fluctuating amid war and surging oil prices, many are increasing their cash holdings or deliberating on the timing of currency exchanges. Lee Hyunmi, WM Specialist at NH NongHyup Bank, noted, “With negative factors in the stock market mounting—such as the war and fading expectations for U.S. interest rate cuts—more investors are opting to wait and see, rather than buying domestic or overseas stocks or adjusting their allocations.” Park added, “In the end, while interest is high, actual investment is decided not only by tax considerations but also by evaluating exchange rates, the attractiveness of the domestic stock market, and the burden of the required holding period.”

High-Net-Worth Clients Will Weigh Effectiveness Before Repatriation... Execution Outlook: "5% vs. 50%"

PBs believe that the RIA could serve as a “partial incentive” to repatriate overseas investment capital. Rather than being a game-changing solution, it is viewed more as a catalyst encouraging those who had already planned to return funds. Lee, the specialist, said, “Clients who already intended to sell overseas stocks during the high exchange rate period, or those with significant gains and thus certain tax burdens, or those planning to reduce their dollar holdings, will be able to benefit from the tax incentives to some extent.” However, she added, “If the one-year holding requirement for domestic stocks is seen as a restriction in today’s volatile market, and if clients fear capital losses in the event of a market downturn, there is hesitation despite the tax benefits.”

On the ground, there are many investors who have already reduced their overseas stock allocations and increased their domestic holdings. In this context, PBs believe that around 10% of all clients will additionally execute repatriation investments. Park explained, “Based on client inquiries and responses during consultations, about 10–20% of clients with overseas investments are considering repatriation, but actual execution is likely to occur first among about 10%.” Kang Boyoung, Deputy Director at KB Kookmin Bank’s Busan PB Center, also said, “Only about 5–10% are expected to actually move.”

On the other hand, some predict that about half of clients will actively repatriate, which will ultimately depend on perceptions of domestic market growth. Choi, the specialist, said, “Improved perceptions of the domestic market are being driven by strong performance in semiconductors, and strength in shipbuilding, defense, and nuclear power. The government’s determination to reform the capital market is also providing valid opportunities for further entry into domestic stocks.” However, she also predicted that the Middle East crisis, new tariffs from the Trump administration, future interest rate trends, and risks related to private lending could all be pivotal factors in additional entry and repatriation.

RIA May Help Stabilize the Exchange Rate, But the Move of Overseas Retail Investors Remains a Medium- to Long-Term Issue

Last year, individual investors’ net purchases of overseas stocks and structural dollar demand increased downward pressure on the Korean won. In 2025, the volume of overseas stock investments by retail investors reached USD 45 billion (about 6.7905 trillion won), surpassing the USD 40.7 billion invested by public institutions such as the National Pension Service during the same period. As a result, overseas stock investments by domestic investors increased by USD 72.2 billion year-on-year, reaching USD 123.05 billion during the same period—almost equivalent to the record-high current account surplus. Currently, although external factors such as the Middle East crisis and the withdrawal of foreign investment from the domestic market are in the spotlight, market participants still see the supply-demand issue caused by retail investors’ overseas investments as a medium- to long-term challenge.

On the ground, many believe that there will be renewed demand to move funds back to the U.S. after the local elections in June, so the situation bears watching. Park Yangseo, Team Leader at Shinhan Premier PWM Gangnam Finance Center, said, “The U.S. will host the North and Central America World Cup in June and hold midterm elections in November. (Although the expected timing may be delayed) there is also the possibility of a policy rate cut. Those who expect the U.S. stock market to improve towards the end of the year believe that money will still move overseas.” Kim Doa, PB Branch Manager at Woori Bank TCE Signature Center, also emphasized, “For incoming funds to be anchored in the domestic stock market, Korean companies need to achieve tangible value-up results.”

However, the general view is that the RIA will only contribute to exchange rate stabilization in a limited way until the end of May, when capital gains tax is 100% exempted. Jung Sungjin, Deputy Director at KB Kookmin Bank’s Gangnam Star PB Center, said, “Repatriation through the RIA will certainly help stabilize the exchange rate, but its effect should be evaluated in conjunction with other factors. The Iran crisis will reach a critical turning point in the second quarter.” Park also commented, “The key factors currently moving the exchange rate are much larger than the RIA. While the RIA may help, it is unlikely to bring down the exchange rate on its own. The energy shock from the Middle East war, surging Brent crude prices, a strong dollar, and risk aversion across Asian stock markets are all more direct influences.”

This content was produced with the assistance of AI translation services.