interest rates in turkey 17%! Is it possible to save there?

enxdtw

I had a look at the interest rates table for different countries round the world and found iceland at 14% and turkey at 17%. My question is, sounds like a good return on your money, do you have to be icelandic/turkish to put money in these accounts or can I just convert my money into the respective local currency, open a savings account in the country, get the interest and convert whatever cash I need from the savings to pounds?

Thanks for any suggestions

Dave

ManAtHome

You can convert in and out, but check the history to find out why they're offering "high" rates - may not work out so well against Sterling... http://www.oanda.com/convert/fxhistory

dipsomaniac

high interest rate = high inflation = weakening currency. all of the interest received (and more) could be lost when converting back to GBP.

currency can be very volatile. the far east countries lost up to 50% of their value during the financial crisis of 1997.

lolly1963

Hi,
Remember with these rates is that interest is taxed at source on the 15% or 17%.
You will find that you would need to obtain a tax number also in Turkey.
Also, any income earned from savings should be declared on your UK tax return, so all in all, not really worth the hassle, only if you live there and live off the interest and use there own currency.

Jonbvn

You really do not want to save in Turkish lira, firstly since the number of zero's is mind boggling!

I worked in Turkey in 1998. Fortunately, I was paid in sterling. The local staff were paid in lira. However, every 6 months, all the local staff got 20% pay rises. Apparently, this was based on the rate of devaluation of the lira against the US$, such that the local staff salaries remained unchanged in $ terms.

dipsomaniac

they had to knock 6 noughts off the 'new turkish lira' as they could only have one checkout in the local tesco due to the width of the till.

enxdtw

Not necessarily iceland for example is on track for an inflation target of 2.5% but has an interest rate of 14% I don't think that there is anything unstable about their economy. The chart shows quite a lot of general stability over 120 days however the currency seems to have leapt in value against the dollar recently (more than the pound). Also On the second point what do you mean that the interest will be lost on converting the currency back to pounds. Doesn't this depend on the relative strengths of the two currencies both when transferring in and transferring out which can go up as well as down? I mean if the interest rates were to go up here the general consensus is that savers should be glad, but from what you are saying maybe they should be worried from inflation and the deflated value of the pound.

Regards

Dave

missile

People do make money from currency speculation, but it is risky and the margins are small. I think you will find it difficult to open a bank account in a.n.other country due to money laundering concerns. However, I don't think this would be an issue were you to open an account in Nigeria!

dipsomaniac

firstly, i had better confirm that i am not an economist/currency trader and am looking at this from a basic perpective.

the interest could be lost if the currency you are invested in weakens against your base currency during the time you are invested. I am just making the observation that an interest rate of 14% is not sustainable and has to have a negative effect somewhere. the currency must be weakening or why would the central bank be trying to attract buyers?

the interest rate is one of the tools used by central banks to control inflation and the strength/weekness of the currency on the exchanges. in a stable/balanced economy interest rates would be approx equal to inflation so that savers money does not lose value.

dipsomaniac

george soros - if you are looking in on this thread can you spare some of your wisdom?

moonrakerz

I hear interest rates in Zimbabwe are good too !