A handful of U.S. banks are offering individuals access to foreign-currency bank accounts, but the risks should deter all but the most adventurous investors, analysts say.

Investors can reap profits from high foreign interest rates and favorable currency movements, but "it doesn't take much of a currency move to wipe out the rate advantage," said Michael Faust of the investment company MMS International. "The dollar must go your way to make money,"

Still, banks offering the accounts say they have gotten a strong response from investigator willing to take the risk.

Legal Since 1990

Early in 1990, the Federal Reserve allowed banks to open accounts in foreign currencies. The accounts, like other deposits, are insured against bank failure. But they are not insured against currency risk - a fact that is stressed in advertising.

First Union National Bank of North Carolina, Charlotte, started a foreign-currency money market account two years ago and added a certificate-of-deposit component this year. The minimum deposit is $25,000.

Mark Twain Bancshares of St. Louis began offering foreing currency CDs shortly after the 1990 Fed ruling. The minimum deposit is $20,000, and the bank offers accounts in 20 to 25 currencies.

A foreing-exchange money market account is to be introduced this summer.

"We offer anything that is liquid and tradable," said Frank O. Trotter, vice president in charge of the World Currency CDs at Mark Twain.

Choice of Currencies

Citicorp's Citibank opened its Multi-Money Account CDs to U.S. citizens about a year ago, said Philip Miller, vice president for international personal banking.

At maturity, an investor can roll over the CD into the same or a different currency or park the funds in a more liquid but lower-interest money market account.

Citibank, which requires a $25,000 deposit, offers the Japanese yen, German mark, Swiss franc, British pound, and Australian, New Zealand, and Canadian dollars.

First Union offers accounts in those currencies, as well as in the Dutch guilder, Italian lira, French franc, Spanish peseta, and Portuguese escudo.

Edison, N.J.-based Midlantic Corp. has a foreign currency CD with a minimum deposit of $50,000.

Corporations also use the accounts to facilitate money transfers, but most customers are individuals, bankers said.

"It's a nice way to diversify your portfolio if you can afford to take on the risk," said Angie Smith, fund management officer at First Union in Charlotte, N.C.

The most popular currencies are the British pound and the German mark, followed by the Canadian dollar and Swiss franc.

"These are countries people understand and are comfortable with," said Ms. Smith.

First Union currently pays 9% on its three-month CD in German marks, whereas the equivalent Eurocurrency rate is 9.875%. The dollar earns about 3.875%.

For the hardy, rewards can be high. In 1990, investors earned 25% to 35% on marks and Swiss francs, said Mark Twain's Mr. Trotter.

But Eurocurrencies lost 20% in the first half of 1991 after the dollar surged in the wake of the Gulf War, he said.

"It is not for every customer. We don't suggest it for people who want to live off the interest," said Ms. Smith.

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