Did You Know You Can Earn
Interest While Trading FX?
Take advantage of interest rate differences and earn passive income
As the market anticipates the interest cycle to soon be coming to an end, many countries have faced further rate hikes in 2023Q3 due to strong inflation data. The U.S. has raised its interest rates to 5.5%, while Canada and the Eurozone have increased to 5% and 4.5%, respectively. In contrast, Japan and Switzerland have continued their relatively loose interest rate policies. The Japanese yen remained at an ultra-low interest rate of -0.1%, while the Swiss franc has maintained at the 2023Q2 rate of 1.75%.
The differences in the tightness of the interest rate policies have resulted in interest rate differences amongst various currencies. As a result, by holding relatively high interest rate currencies and/or shorting relatively low interest rate currencies overnight, you will be able to generate a positive overnight interest rate income.
Z.com Forex provides ultra competitive spreads to clients. With the use of leverage, clients may increase potential returns while keeping trading costs to the minimum. You may not only earn profits from trading FX, but also interest rates. Using the USD/JPY pair, for example, the daily interest rate return for each lot is HKD11.92, and the required margin is only as low as HKD3,904.
Distinct Characteristics of FX Trading
Hold High Interest Rate Currencies and Earn Daily
Generate extra income in addition to your FX trading gains
Buy and Sell Anytime
High flexibility with no fixed commitment period
15 Products for You to Trade
Choose the currency pair which fits your investment goals and trade as you like
2023Q3 Top 2 Currency Pairs with Highest Interest Rate Return
Approx. 3,905 HKD
Earn Overnight Interest2
Average 11.92 HKD Per Day
Total Return Between July to September
Required Margin 1
Approx. 2,829 HKD
Earn Overnight Interest2
Average 8.13 HKD Per Day
Total Return Between July to September
- 2023Q3 Overnight Interest Rate Ranking by Currency Pair
Profits and Losses from High Interest Rate Currencies Explained
*The data below are for reference only. The USD/HKD exchange rate is fixed at 7.85 for illustrative purposes, and the actual rates may differ. Please refer to your trading account for the actual rates.
- Earning from Trades along with Positive Overnight Interests
Assume that you buy 1 lot USD/JPY at 138.00 and close the position at 140.00 10 days later. You will earn a total of HKD1,121.43 in trading profits in addition to HKD113.2 (10 days x average of HKD11.32 per day) in overnight interest, for a total of HKD1,234.63 in profits.
- Losing from Trades while Earning Positive Overnight Interests
Assume that you buy 1 lot USD/JPY at 138.00 and close the position at 136.00 10 days later. You will lose a total of HKD1,154.41 in trading losses while earning HKD113.2 (10 days x average of HKD11.32 per day) in overnight interest, for a total of HKD1,041.21 in losses.
If you hold your positions overnight for a longer period than the example above while keeping the closing price constant, the overnight interest may exceed the losses generated due to unfavourable price movements.
- Earning from Trades while Losing Overnight Interests
Assume that you sell 1 lot USD/JPY at 138.00 and close the position at 136.00 10 days later. You will earn a total of HKD1,154.41 in trading profits while losing HKD166.7 (10 days x average of HKD16.67 per day) in overnight interest, for a total of HKD987.71 in profits.
- Losing from Trades along with Overnight Interests
- Assume that you sell 1 lot USD/JPY at 138.00 and close the position at 139.00 10 days later. You will lose a total of HKD564.75 in trading losses in addition to HKD166.7 (10 days x average of HKD16.67 per day) in overnight interest, for a total of HKD731.45 in losses.
Tips on Overnight Interest
How is a High Overnight Interest Rate Generated?
- A wide interest rate difference continues to remain throughout 2023Q3
- Japan has maintained a negative 0.1% interest rate, while Switzerland has remained at a low level of 1.75%. The U.S., Canada, and Eurozone have raised to 5.5%, 5%, and 4.5%, respectively, further widening the interest rate differences
- As the interest rate for yen remains low, and the U.S. dollar is relatively much higher, buying USD/JPY is conceptually borrowing JPY at a low interest rate to purchase USD to earn a high interest rate, thus generating interests
- The widening of interest rate differences has enhanced the carry trade effect
How to Earn Overnight Interests?
- Overnight interests will be generated by holding positions overnight at 6:00 a.m. Hong Kong Time (New York Winter Time) or 5 a.m. Hong Kong Time (New York Summer Time), and will be reflected in the account balance automatically (more details)
For open positions held overnight through Wednesday's Trading Close, "3-Day" overnight interest will be realized in order to account for the settlement of trades through the weekend period.
- You may earn interest by buying a relatively high interest rate currency. Conversely, you will need to pay interest for holding a relatively low interest rate currency
How to Check the Overnight Interests?
- The Rollover Calendar, showing the historical rollover price provided by Z.com Forex
The Pros and Cons of Using Leverage In Foreign Exchange Trading
- Foreign exchange involves leverage (max. 20 times as specified by the SFC). All interest rate effects, along with changes in the prices, will be magnified
- High flexibility with no fixed commitment period
- Please be aware of the possibility of trading losses incurred while holding positions overnight to earn interest rates
2. The average daily interest rate is calculated by the total interest amount earned between July to September 2023 divided by 92 days
All data provided are for reference only, and do not constitute any offer, solicitation or advice for any investment products.
Calculate the Expected Return
Get the following data through the Simulated Calculator:
Required margin for opening new orders
Maximum Trade Lots
The maximum lots you can open according to your deposit amount
The Value of Pips
The value of pips converted to HKD
Profit & Loss
Simulate the profit or loss from closing the position
Calculate the total interest income/expense
- The simulated result is for reference only, the simulated calculator may be slightly different from the real situation, and the real account shall prevail
- The interest rate is calculated by the average interest rates between July to September 2023, and may different from the actual rates. Please refer to your trading account for the actual rates
- Only applicable to USD related currency pairs
Such Information does not constitute an invitation or offer by Z.com Forex, or represent the price at which Z.com Forex would be willing to offer and does not constitute any advice or recommendation to conclude any transaction.
No statement, representation or warranty, express or implied, is given by Z.com Forex as to the information's accuracy, completeness or appropriateness for use in any particular circumstances. Z.com will not liable for any errors or omissions for the Information provided, nor for any damages or losses arising from any actions taken in reliance on the Information provided.