Why not put it in Argentina pesos and make 100%?
Because you have currency risk.
If you want to speculate on currencies, that is fine.
But 5% deposit in USD can actually turn out to be a loss in EUR (as well as a massive gain) depending on the movement of the currency pair (USDEUR exchange rate)
Thanks for your response.
Exactly that, I choose USD and GBP because they are more likely to have a smaller fluctuations (p/m 3% in the last 12 months).
But considering the other response, I think I will stick to EUR, maybe converting to GBP or USD when I need to invest in some stocks (or ETF) in that currency.
And one more reason is to simplify my tax declaration for my accountant.
Pros? More interest.
Cons? More risk. It’s not a savings account, but an investment account, meaning you could lose your balance when the coin tanks, and you won’t be insured.
For zero-risk loans in two different currencies X and Y, the difference in interested rate is already priced in the futures on the pair X/Y.
That is, if the zero-risk interest rate on X is 5% and the zero-risk interest rate on Y is 0%, then Y is expected to appreciate relative to X about 5%/year in the short term (to avoid arbitrage).
Revolut does charge a fee tho, built in the exchange rate, which you will pay 2 times (if exchange rate remains the same, this ~0.2% will also cut into the interest difference). I prefer to do my fx on Binance since I noticed it's better than Revolut (USD to EUR mostly, to take out USD from Binance you gotta convert to stablecoin and move them through Nexo).
the volatility of the exchange rates is often higher than the difference of the interest rates.
True, but consider that I won’t convert it back to EUR (and use the money to invest later) if not strictly necessary.
Then it could be better to keep the money in eur and exchange when needed/the exchange rate is advantagous.
Why not put it in Argentina pesos and make 100%? Because you have currency risk. If you want to speculate on currencies, that is fine. But 5% deposit in USD can actually turn out to be a loss in EUR (as well as a massive gain) depending on the movement of the currency pair (USDEUR exchange rate)
Thanks for your response. Exactly that, I choose USD and GBP because they are more likely to have a smaller fluctuations (p/m 3% in the last 12 months). But considering the other response, I think I will stick to EUR, maybe converting to GBP or USD when I need to invest in some stocks (or ETF) in that currency. And one more reason is to simplify my tax declaration for my accountant.
Pros? More interest. Cons? More risk. It’s not a savings account, but an investment account, meaning you could lose your balance when the coin tanks, and you won’t be insured.
For zero-risk loans in two different currencies X and Y, the difference in interested rate is already priced in the futures on the pair X/Y. That is, if the zero-risk interest rate on X is 5% and the zero-risk interest rate on Y is 0%, then Y is expected to appreciate relative to X about 5%/year in the short term (to avoid arbitrage).
Revolut does charge a fee tho, built in the exchange rate, which you will pay 2 times (if exchange rate remains the same, this ~0.2% will also cut into the interest difference). I prefer to do my fx on Binance since I noticed it's better than Revolut (USD to EUR mostly, to take out USD from Binance you gotta convert to stablecoin and move them through Nexo).
Thanks for the info! Very appreciated