Foreign currency account — Definition Explained Simply | Examples & Role
Foreign currency account — is a bank account opened in foreign currency for storing funds, making international settlements, and conducting currency transactions.
Foreign currency account is a bank account where funds are held in foreign currency (for example, in US dollars, euros, British pounds). Such an account is used for international payments, foreign transfers, foreign trade activities, and savings.
Foreign currency accounts can be opened both by individuals and legal entities. They allow you to send and receive money abroad, save funds in stable currencies, and carry out transactions with foreign partners.
Main types of foreign currency accounts
- Current account in foreign currency — used for everyday operations: payments, transfers, settlements with partners.
- Deposit account in foreign currency — opened for a fixed term with interest accrual (similar to a time deposit, but in foreign currency).
- Card account in foreign currency — linked to a bank card and used for cashless payments abroad or online.
Why a foreign currency account is needed
- For international transfers and settlements.
- For storing savings in stable currencies (e.g. USD, EUR, CHF).
- For protection against currency risks and inflation in the national currency.
- For running business with foreign partners.
Examples
- A company in Germany opens a US dollar account for settlements with suppliers from the USA.
- An individual keeps savings in a euro-denominated deposit account.
- A tourist uses a card account in foreign currency to pay while traveling abroad.