Saving with T212 in Hungarian Forints for High 7% p.a. Return?

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Is anybody else saving their uninvested money with Trading 212 in Hungarian Forints?

The interest is a delicious 7.0% p.a.; much higher than other currencies.

I’m aware there are currency exchange fees and currency fluctuations, but considering the significantly higher interest rate compared to, for instance, the 4.35% p.a. being offered for GBP, it is worth it?

I’m wondering if there is a catch other than the above?

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I would have thought that the generous 7% p.a. interest was a ‘hot topic’ for Trading 212 investors/savers. Is there a reason why this doesn’t interest people?

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7% is indeed a great interest rate, but there are (at least) two main things to consider:

  • Foreign currencies cannot be held in an ISA, which are superior for long-term investing, due to the CGT exemption.
  • The Hungarian Forint has been weakening against the British Pound (and other major currencies) in the long term. Your Forints will likely be worth less in the future.
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Added risk is the main one, I’d say. I’m no FX expert but I’d imagine it’s effectively the reason you get a higher rate. Currencies can fall off a cliff as has happened with the Turkish lira in recent years.

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Fixed income in a foreign currency is a bad idea unless you anyway want exposure to that currency because yours is rather weak and it’s better to diversify in another one. Good example would be if you are in a country with a failed currency like Turkey or Venezuela, otherwise the expected returns vs FX risks dont make sense. Just look at how much USD depreciated vs EUR the last couple of months, you would need quite some years of fixed income returns to offset this or cross finger that it will reverse within your holding time horizon

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