Higher savings rates abroad

Herbalus

An Indian colleague at work keeps saying he puts his savings into accounts in India because the rates there are much higher, 4%+ at the moment. As he is Indian and has a house there, I'm assuming it's Indian money he's talking about, but he's suggested I put some of my savings there as well.

I know there's exchange rate risk and no FSCS protection, but is that all there is? I'm fairly sure there's a good reason why we don't all save abroad when countries like Brazil have central bank rates above 10%, but can't put my finger on enough to convince him I don't want to do it. Can somebody clarify?

colsten

Isn't no FSCS protection and the exchange rate risk enough reason for you? Why do you need to convince him? Isn't it your decision what you do with your money?

But assuming that you want to do it despite the dangers: have you investigated whether, as a non-indian citizen, you could even open an account in India?

masonic

High interest rates are often linked to high inflation and weakening of the currency vs. others. What you gain in local currency you may lose in converting back to sterling.

PeacefulWaters

Changing currency twice will wipe out any gain several times over.

bigadaj

India has restrictions on financial services, so e change rate controls and accounts only available to Indians, including non resident Indians, who may be UK or other nationals but of Indian descent.

The highest rates will be in rupees, but once converted from sterling or another hard currency it will be difficult to back when you want to access your savings.

The rupee also tends to devalue against the dollar, and consequently other hard currencies, so 4% interest is wiped out by this. Inflation has also been a problem.

Nothing stoping you doing what you want with your money, nut it's more currency speculation than saving. Look at Brazil, the real hugely appreciated over many years, but has devalued significantly over the last year or two.

Ballard

Whilst you can get, say, 5% per annum interest on foreign currency the exchange rate can fluctuate 10% in a day. Perhaps it won't. Perhaps it'll go in your favour and you'll win twice. It's a risk.

Aretnap

masonic wrote: »

High interest rates are often linked to high inflation and weakening of the currency vs. others. What you gain in local currency you may lose in converting back to sterling.

Indeed, and the Indian Rupee has depreciated by around 25% relative to the pound over the last 5 years - which would have more than wiped out 4% interest over the same period.

Herbalus

Thanks all, that helps. It's not that I need to convince him because otherwise I'd do it: it's more to make him understand why I don't want to invest in India so he'll stop talking about it.

G_M

You can get 6% with Attica bank in Greece.........

mel48rose

:rotfl::rotfl::rotfl:

G_M wrote: »

You can get 6% with Attica bank in Greece.........

Archi_Bald

G_M wrote: »

You can get 6% with Attica bank in Greece.........

That's of course not true, as you know.

Good joke though.