The share price rose, yet you lost money in your home currency. Returns on foreign stocks come from two things multiplied together: price and currency.
When you buy a foreign stock with won, you are effectively buying two things at once: the company's shares and that country's currency. If the shares rise but the currency weakens against the won, your gain shrinks when you convert back. If the shares stay flat but the currency strengthens, you make money in won. To see what actually drove performance, check the return in the local currency and the return in your own currency separately.
The home-currency return is found by multiplying the two returns, not adding them: (1 + stock return) × (1 + exchange rate change) - 1. Here the exchange rate means how many won it takes to buy one unit of the foreign currency.
A rising won-dollar rate means it takes more won to buy one dollar, so the won has weakened. For someone already holding US stocks, that pushes the won value of the holdings up. For someone about to buy, the same won now buys fewer shares. Whether a headline about the rate going up or down helps or hurts you can be the exact opposite depending on whether you already own the stock or plan to buy it.
Banks and brokers quote different rates for buying and selling a currency. Convert won to dollars and straight back, and you lose that gap. Trade often and convert each time, and the cost accumulates and eats into returns. Preferential rate terms, automatic conversion and which rate applies when you place an order in won all vary by broker, so check the official terms before trading. Deciding in advance whether to keep sale proceeds in the foreign currency or convert them also cuts unnecessary conversions.
Some foreign-investment products listed at home are hedged, designed to reduce the effect of exchange rate moves. They lock in a future rate through contracts such as currency forwards. That dampens swings caused by the currency, but it comes with a hedging cost that grows or shrinks with the interest rate gap between the two countries. You also give up the gain when the currency moves in your favour. There is no right answer between hedged and unhedged; it is a choice about how much currency risk you accept.
Dividends on foreign stocks usually arrive in the local currency, often after local tax has already been withheld. The rate at the time you convert them decides how much you actually receive. If capital gains tax is calculated after converting to won, exchange rate changes alone can create or reduce a taxable gain even when the share price has not moved. Rates, allowances and filing rules change, so always check the tax authority's official guidance.
Exchange rates are as hard to predict as share prices. Even so, many mistakes come from rushing decisions because of the currency.
With foreign stocks, it helps to look at the share price and the exchange rate separately. Put the same stock side by side in the local currency and in won using a comparison tool or a regular-investment calculator that supports currency conversion, and you will see the two returns can differ considerably over the same period. This article explains how currencies affect returns; it does not recommend converting or trading at any particular time and is not investment advice.
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