OK, here is the solution. In the end, I decided to phase out ability to set foreign currency on balance sheet accounts. Mostly because there is no good way to view balances in foreign currency anywhere.
If you need to create balance sheet accounts in foreign currency, enable Special Accounts tab. This will let you create foreign currency accounts (e.g. loan accounts) and will let you view their balance/ledger in their foreign currency.
See: [16.8.41] Added ability to create custom subsidiary ledgers
If you already have foreign currency accounts created in your chart of accounts, these accounts will be automatically converted to special accounts.