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Looking to make some money? While most of the central banks in developed and emerging markets are either on hold or cutting rates, investors seem to have limited choice in their search for higher returns. In these times, the emerging and frontier markets show great potential and appear to be highly lucrative.
Using data from deposits.org, we take a look at the top ten countries providing highest interest rates in the world ranked by their 2 year deposit rates.
But wait! Isn’t there supposed to a catch?
While this may look like easy moneymaking, it’s NOT! There are various things that need to be kept in mind before investing in any other country. Firstly, you need to know how restrictive are the policies of a country on money going in or out of it (for example Brazil, etc). Second, you may also want to stay away from a potentially volatile currency, a 20-25% interest rate may not hold the same charm when your currency loses equal amount of its value.
Lastly, it needs to be understood that however high the interest rates may be the only real profit lies in the amount leftover after the ever growing inflation has had its fill. In the words of Georgandellis of exchange capital management ‘The safer things are, the lower interest rates are likely to be, and vice versa’. It should be reminded that money market and savings are only as safe as the entity backing their promise
In the above table, we have listed the same countries we took earlier after factoring in the interest rates.
As can be seen, countries like Uzbekistan and Georgia have quite profitable yields even after we subtract the inflation percentage. In case of Georgia there is actually a rise instead of fall in the profits but at the same time in case of Uganda there is a difference of -0.70% due to extremely high inflation rates. Taking in account these figures we see what a tricky game the investment can be. But it is highly intriguing to see what your money could offer you in other parts of the world. As case may be you might just get lucky and find yourself a four leaf clover on a random walk in the woods.