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Korean customs does not convert your invoice at the rate on the invoice. It does not use the rate on the day you pay, and it does not use the rate on the day you file the import declaration either. Under 관세법 제18조 (Customs Act, Article 18) and 관세법 시행규칙 제1조의2제1항 (its Enforcement Rules), the dutiable value is converted at the average of the base rates first posted each business day, Monday to Friday, in the week before the week of the declaration. The Korea Customs Service publishes that rate weekly, and each weekly rate applies from a Sunday for a full week. A declaration filed on Friday 10 July 2026 would have been converted at 1,548.52 won per dollar, while that day's base rate was 1,504.2 — the customs rate was 2.946% higher.
On a USD 100,000 invoice, the taxable value would be ₩154,852,000 instead of ₩150,420,000, a difference of ₩4,432,000 in the base on which duty and import VAT are calculated. We checked the formula against the Korea Customs Service's own rate feed for eight weeks in two currencies, dollar and yuan: all sixteen published rates matched the average of the previous week's base rates.
So an importer who buys in dollars and sells in won faces at least three different rates on one shipment: the rate the price was agreed at, the rate the bank charges on the day the money leaves, and the customs rate of the week before declaration. None of them has to agree with the others. How long you are exposed is set mostly by the payment term — the period between fixing a foreign-currency price and paying it — which is why this post is the follow-on to our piece on T/T, L/C and usance and the working-capital cost of the same payment days is in our note on the cash conversion cycle.
Nami Tech Solutions (NTS) works on the contract side of this: we specify the currency, the reference rate and the date it is read, the payment timing and the re-quote trigger in the order terms, and we find and qualify sources in China to buy from. Forwards, options and exchange-rate insurance are sold by your bank and by 한국무역보험공사 (K-SURE, the Korea Trade Insurance Corporation); NTS does not sell, broker or arrange them. This article sets out the rules we work to.
Disclaimer: This article is general information, not legal, tax, accounting or financial advice, and it is not a recommendation to buy any hedging product. Forwards and options are sold by banks, and exchange-rate insurance by K-SURE, under their own eligibility rules and terms. Confirm customs valuation with a licensed customs broker (관세사) and any hedge with your bank or K-SURE. Status as of 4 November 2026; nothing here is an exchange-rate forecast.
Three Rates on One Shipment, and the One Customs Uses
The statutory text is short. 관세법 제18조 (법률 제21490호, in force 2 October 2026) says that when a foreign-currency price is converted to won to set the dutiable value, the Commissioner of the Korea Customs Service fixes the rate by averaging the base or cross rates of the week before the week containing the date in Article 17. Article 17 says duty is levied under the law in force at the time of the import declaration, so for an ordinary import the anchor date is the declaration date. The Enforcement Rules (재정경제부령 제42호, in force 31 July 2026) add the mechanics in 제1조의2제1항: the rates averaged are those that the foreign-exchange brokerage companies "first post each day" from Monday to Friday of the previous week — the base rate or, for other currencies, the base or cross rate. 관세법 시행령 (Enforcement Decree of the Customs Act) 제288조제3항 delegates the decision to the head of the customs valuation and classification institute (관세평가분류원장).
The law says "average" and nothing more, so we checked the published numbers. The customs rate feed gives a weekly import rate starting on a Sunday. For eight weeks in 2026 we took the Bank of Korea's published daily base rate (매매기준율) for the dollar and the yuan, averaged the previous week's business days, and compared:
The other twelve cases (weeks starting 4 January, 12 and 19 July, 9 and 16 August and 25 October 2026) match the same way: a plain average of the business days, rounded to two decimals, with days that have no posted rate simply dropped — two of those weeks had only four posted days. We did not find the separate detailed notice the Commissioner may issue under 제1조의2제2항, so the rounding rule is inferred from the matches, not read from a text.
Two things follow. The rate printed on your invoice changes nothing at customs: the invoice amount is the starting point, but the conversion rate is set by law. And because the customs rate is a one-week-lagged average, it sits above the day's rate when the won is strengthening and below it when the won is weakening — arithmetic, not a forecast. The July example was a week of fast won strength.
Because the customs rate for a week is published from the Sunday it starts, you can compute the taxable value before you file. A declaration filed on the last day of one rate week, rather than the first day of the next, is converted at a different average, so the filing week matters. Ask your 관세사 which week your declaration will fall in.
The money itself moves at a third rate: your bank's customer selling rate — the base rate plus its spread — on whatever day the payment term makes due. How the customs value is built up from the invoice (the CIF-type base) is in our Incoterms piece; this post deals only with the conversion rate.
How Far the Won Moved, 2024 to 2026
"We buy in dollars, so there is no currency risk" holds only for someone whose costs and revenues are both in dollars. A Korean importer pays duty, VAT, freight in Korea, salaries and its own customers in won. These are the Bank of Korea's daily base rates (ECOS table 731Y001), from 2 January 2024 to 3 November 2026; 2026 is the year to date.
USD/KRW (won per dollar)
CNY/KRW (won per yuan)
The 30-trading-day column measures the largest change within a calendar year between two dates thirty trading days apart. In 2026 that was 2 July to 14 August: the dollar went from 1,554.4 to 1,414.9 won, and the won value of the same USD 100,000 invoice went from ₩155,440,000 to ₩141,490,000. That window happened to favour importers. The largest 2024 window, 2 October to 15 November, went the other way: the dollar rose 7.61%, which is what an importer who has fixed a dollar price and not yet paid it feels as a cost increase.
If your margin on a material is smaller than the movement a single payment term can span, the currency, not the material, is setting your result on that order. The table cannot say which way the next window will go, and neither do we.
Which Currency to Buy In
Most Korean imports from China are still settled in dollars, but less so than a few years ago. The Bank of Korea's settlement-currency series for imports by region (ECOS table 303Y004) gives:
In value, yuan-settled imports from China rose from USD 5,503.4 million in 2019 to USD 19,671 million in 2025. The series is regional; it does not break out materials, so we cannot say whether the materials trade follows the same pattern.
Switching the invoice currency changes which exchange rate you carry, not whether you carry one:
- Invoice in dollars. You carry USD/KRW. A factory whose costs are in yuan carries USD/CNY on its side.
- Invoice in yuan. You carry CNY/KRW instead; the factory no longer carries the dollar leg. Over these three years CNY/KRW was a little less volatile than USD/KRW (annualised volatility of daily changes 6.07%, 6.91% and 8.70% against 7.12%, 8.27% and 9.62%; an approximation), but the two moved together in the large swings — the 2026 summer window was −8.48% in yuan and −8.97% in dollars. A won-based buyer is still exposed. Hedging a yuan exposure can also be narrower: as set out below, K-SURE's option-type cover for importers is in dollars only.
- Invoice in won. The seller carries the whole move. It happens — 4.3% of imports from China in 2025 — and a seller that carries the whole move has reason to price for it.
Customs converts a yuan invoice at a yuan customs rate built the same way as the dollar one, as the table above shows. A direct won–yuan market has existed in Seoul since it opened in December 2014; we did not check which Korean banks remit yuan for importers, or at what cost, so ask your own bank.
Whatever the currency, ask the supplier for the quote's validity period in writing; without it, who carries a move between quotation and order is left open.
What a Forward or an Option Can and Cannot Do in Korea
A forward fixes the rate at which your bank will sell you the currency on a future date; an option gives you the right, for a premium, to buy at a set rate. Either turns the payment-day rate into a known number. Neither touches the customs rate, and neither protects a price you have not yet agreed with your supplier or your customer.
Korean rules shape what a small importer can buy:
- No report for an ordinary bank forward. Under 외국환거래규정 제7-40조제1항 (Foreign Exchange Transaction Regulation, 재정경제부고시 제2026-103호, in force 16 September 2026), a derivative that a foreign-exchange bank deals as part of its licensed business needs no report. 제7-40조제2항 lists the exceptions that must be reported to the Governor of the Bank of Korea with supporting documents: paying 20% or more of the notional as an option premium or other upfront fee, folding the loss on an existing derivative into the price of a new one, and transactions designed to avoid reporting.
- Hedging purpose only, for ordinary investors. 자본시장법 제166조의2제1항제1호 (Financial Investment Services and Capital Markets Act, 법률 제21857호, in force 2 October 2026) limits OTC derivative dealers, when the counterparty is an ordinary (non-professional) investor, to trades made for hedging, and requires them to check and keep records of the risk being hedged. 시행령 제186조의2 (대통령령 제36756호, in force 13 October 2026) adds that the hedged item must exist or be expected, and that the gain or loss on the derivative over its term must not exceed the gain or loss that can arise on the hedged item. A company that is not a professional investor under the Act is an ordinary investor; each company should confirm its own status.
Not confirmed: how this provision applies to banks' own forward business, so we read the bank side from the supervisor's rule below.
- The bank checks that the exposure is real, and caps the ratio for professional-investor companies. Annex 15-2 of the 은행업감독업무시행세칙 (the Financial Supervisory Service's detailed rules for bank supervision), the risk-management standard for FX derivatives, requires the bank to confirm that the hedged asset, liability or contract exists or is expected before dealing, and tells it to keep the hedge ratio at no more than 125% for corporate counterparties classed as professional investors (amended 25 June 2025). The ratio counts new FX derivatives with all institutions over the limit period — and it expressly includes K-SURE exchange-rate insurance.
History: the annex was introduced on 31 December 2009. A government plan of 7 March 2025 describes it: a 125% limit for professional investors introduced in 2009, cut to 100% in June 2010, and restored to 125% to reflect real demand; it also says banks set the underlying amount from the company's record, for example the average of its last three years of imports and exports.
In practice a bank will ask what you are hedging and how much of it you have, and the answer is documentary — contracts, orders, past import records. We did not collect individual banks' document lists. Material from before June 2025 cites a 100% ceiling; that was the earlier figure for professional-investor companies. The current texts give 125% there and no percentage at all for ordinary investors.
K-SURE Exchange-Rate Insurance for Importers
K-SURE's exchange-rate insurance (환변동보험) is usually discussed as an exporter's product, but it has an import side. On K-SURE's comparison table, import cover exists "to prevent losses from a rise in the exchange rate": K-SURE pays the importer when the rate rises above the guaranteed rate. In the forward-type product it is two-way — when the rate falls, the importer pays the gain back to K-SURE. Only the won difference between the guaranteed rate and the settlement rate is settled with K-SURE; the currency itself is still bought from a commercial bank. In its description of the forward type, written for the export side, K-SURE says no margin or collateral is required; we have not confirmed the import side on this point.
Who can use it. K-SURE's pages limit the import side to domestic small and medium-sized or mid-sized companies without credit problems, and require one of two things: the imported goods are on K-SURE's supported list (key resources and facility goods, or advanced products under 산업발전법 제5조), or the company is covered by the 「소재부품장비산업 경쟁력 강화를 위한 특별조치법」 (the special act on the materials, parts and equipment industry, as K-SURE's page names it) and the goods are not on an exclusion list. We could not open either list, and we could not confirm whether a non-manufacturing trading company qualifies under the second route. Ask K-SURE before you plan around it.
Products and currencies. For importers, K-SURE states that the option type is run only as a full-cover option with no early settlement, in US dollars. The forward type's currency list (USD, JPY, EUR and CNY) and its maximum term sit on a page headed as export-based; we could not confirm whether yuan cover or the same term applies on the import side. The same export-basis page gives the option type a maximum term of six months; we have not confirmed that the import option carries the same term.
Cost. For the forward type, the published premium is a base rate reduced by 15% for small and medium-sized companies and 10% for mid-sized ones. K-SURE's base rates for six months range from 0.020% to 0.035% depending on the company's grade. For USD 1 million over six months at the C–D grade rate of 0.025%, after the 15% discount, that is 0.02125%, or USD 212.5. The option type charges a 0.005% base rate plus an option premium posted daily behind a login we do not have, with no size discount; K-SURE describes it as somewhat more expensive than the forward type. K-SURE's premium tables are published without an import/export split, so whether the import side uses the same table is not stated. Note that cover bought here counts toward the bank's hedge ratio described above.
The fit is clearest for a dollar-invoiced importer that qualifies on the goods list.
What to Write Down
This is our checklist, not a quoted model clause. We did not obtain the ICC model sale contract's wording, and the right drafting for your contract is a matter for your lawyer.
- The currency, the same on the quote, the contract and the invoice.
- The reference rate and its date. If any price, band or adjustment depends on an exchange rate, name the source and the reading date — for example, the Bank of Korea's ECOS base rate (매매기준율) on a named date, or the Korea Customs Service import rate for a named week. A clause that says "the current rate" without a source invites two parties to read two numbers.
- A band and a re-quote trigger. For repeat orders, say how far the reference rate may move from the contract rate before either side may ask to re-price, and how a re-price is agreed.
- Quote validity, in writing. Ask for the number of days a quote holds and what happens after.
- Who carries the move between quote and payment. Say it, rather than leaving it to the currency of the invoice by default.
- Payment timing against exposure. Each extra day between fixing the price and paying it is a day of open exposure, and the payment term sets that span; the mechanics of each term and the Korean reporting side of advances and usance are in our payment-terms post.
- Your own side. If you hedge, size it to documented orders: the bank will check the exposure is real.
Who to ask:
- Your bank: which documents it needs to size a forward for your orders.
- K-SURE: whether your goods or company are eligible for the import side.
- Your 관세사: which customs-rate week your declaration falls in.
What This Page Does Not Say
Some of this is specific enough that we go through it directly rather than in public: how a reference rate and re-quote band would be set for your volume and payment term, how Chinese suppliers typically respond to yuan invoicing or a written re-quote trigger, and what a bank asks for before it will size a forward for an order of your scale. Most of it depends on your volume and payment term.
Buying materials in dollars or yuan and selling them in won? NTS specifies the currency, the reference rate and its date, the band and re-quote trigger and the payment timing in the order terms, and finds and qualifies sources in China to buy from. If you already have a supplier, we can review the quote and contract terms alone, and check that the contract states the currency, the amount and the payment dates in writing, so that your bank or K-SURE has documents to check your exposure against; the hedge itself is theirs to sell. Write to [email protected] or use the inquiry form with the currency of the quote, the payment term, your monthly volume and the currency you sell in.
Frequently Asked Questions
Does Korean customs use the exchange rate on my invoice?
No. Under 관세법 제18조 and 관세법 시행규칙 제1조의2제1항, the invoice amount is converted at the Korea Customs Service rate for the week of the import declaration, which is the average of the previous week's Monday-to-Friday first-posted base rates (base or cross rates for other currencies). The rate written on the invoice has no effect on that conversion.
Which week's rate applies if I file the declaration on a Monday?
The rate for the week containing the declaration date, which the Korea Customs Service publishes as applying from that Sunday. A declaration on Monday 6 July 2026 fell in the week starting 5 July, whose dollar rate of 1,548.52 is the average of the base rates from 29 June to 3 July. Filing on Monday rather than the previous Friday changes the rate week; filing on another day of the same week does not.
Is there a limit on how much I can hedge with a bank forward?
Yes, in two ways, as we read the rules. For ordinary investors, the securities-law hedging-purpose rule (자본시장법 제166조의2, 시행령 제186조의2) caps the derivative's gain or loss at that of the hedged item; we read it from the dealer side and did not confirm its application to banks' own forward business. On the bank side, for corporate counterparties classed as professional investors, the Financial Supervisory Service's bank rules (은행업감독업무시행세칙 Annex 15-2, amended 25 June 2025) cap the hedge ratio at 125%, counting K-SURE exchange-rate insurance. In both cases the bank first checks that the hedged exposure exists.
Do I need to report a currency forward to the Bank of Korea?
Not for an ordinary forward with a Korean foreign-exchange bank. 외국환거래규정 제7-40조제1항 exempts derivatives a bank deals as licensed business. 제7-40조제2항 requires a report where 20% or more of the notional is paid as an upfront premium or fee, where an earlier derivative's loss is rolled into a new one, or where the structure is meant to avoid reporting.
Can an importer buy K-SURE exchange-rate insurance?
Possibly. K-SURE runs an import side for small, medium-sized and mid-sized companies without credit problems, where the imported goods are on its supported list or the company falls under the 「소재부품장비산업 경쟁력 강화를 위한 특별조치법」 and the goods are not excluded. The import option type is dollar-only, full cover, with no early settlement; the forward type is two-way, so the importer pays K-SURE back if the rate falls. Confirm eligibility with K-SURE, as the goods lists were not visible to us.
Should I ask the Chinese supplier to invoice in yuan?
It moves your exposure from USD/KRW to CNY/KRW rather than removing it. Bank of Korea data (ECOS 303Y004) show yuan settlement of imports from China rising from 5.1% in 2019 to 13.9% in 2025, so it is a known option. Check first whether your bank can remit yuan at a cost you accept, and note that K-SURE's import option cover is in dollars only.
References (Public Sources)
Held in full and read directly: Korean statutes and rules retrieved from the 국가법령정보센터 (National Law Information Center) open API on 4 November 2026 — 관세법 (법률 제21490호, in force 2 October 2026) 제17조 and 제18조; 관세법 시행령 (대통령령 제36140호) 제288조제3항; 관세법 시행규칙 (재정경제부령 제42호, in force 31 July 2026) 제1조의2; 외국환거래규정 (재정경제부고시 제2026-103호, in force 16 September 2026) 제7-40조, together with 제2-9조의2 and 제2-10조의2 on banks' own positions and reporting; 자본시장과 금융투자업에 관한 법률 (법률 제21857호, in force 2 October 2026) 제9조 and 제166조의2; its 시행령 (대통령령 제36756호, in force 13 October 2026) 제10조 and 제186조의2; and the Financial Supervisory Service's 은행업감독업무시행세칙 Annex 15-2, 「외환파생상품거래 리스크 관리기준」, in the version in force from 30 June 2026 (annex introduced 31 December 2009, last amended 25 June 2025). The Bank of Korea's ECOS statistics, retrieved 4 November 2026: table 731Y001, daily won–dollar and won–yuan base rates, 2 January 2024 to 3 November 2026; and table 303Y004, annual settlement currencies of imports by region, 2019 to 2025. The Korea Customs Service's customs exchange-rate open API (관세환율정보), weekly import rates for the eight weeks starting 4 January, 5, 12 and 19 July, 9 and 16 August, 25 October and 1 November 2026, retrieved 4 November 2026 and compared against ECOS. K-SURE's exchange-rate insurance pages — usage requirements, premiums, the forward-type and option-type product pages, the premium-rate tables and the application-documents page — accessed 4 November 2026; the pages carry no publication or revision date.
Read partially or through secondary sources: The Ministry of Economy and Finance, Financial Services Commission, Bank of Korea and Financial Supervisory Service plan 「외환수급 개선을 위한 추가 방안」 of 7 March 2025, obtained as a copy from a third-party mirror rather than from the government's own posting. The opening of the won–yuan direct market in Seoul in December 2014, from press reports of the time; the Bank of Korea's own release was not obtained. The TransLex Principles commentary, for the general point that parties may use an exchange-rate adjustment clause; the ICC Model International Sale Contract's wording was not obtained, and no model clause is quoted above. We did not find the Commissioner's detailed notice under 관세법 시행규칙 제1조의2제2항, K-SURE's supported and excluded goods lists, or individual banks' forward-contract document lists.
Forecasts, duty amounts, bank names and our buyers' terms are absent above because the public record does not support them, or because they are ours to discuss on request rather than in public.
