My India team told me that the savings accounts at the state bank of India gives like 10% return. 😱. Asked a million questions since that’s really hard to believe. Has anyone done this?

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I looked at this a few years ago...

At that time, you had to convert to INR to get the ~10% interest. And the INR was losing 10%ish to the dollar each year, so it was pretty on par with US CDs.

Not sure if that's still the case.

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Argentina gives 40% interest rate, in case you want to move money internationally without looking at currency risk 😀

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Yes. I have multiple CDs in India for around 8.5%

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For people in US, USD growing against INR will counter and in India, the inflation will counter the growth in interest. So you may as well put in a high yield savings account in the US OR CDs. If your goal.is long term, just index it.

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Do a backward test, I am sure you will not see a huge gain.

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It’s true. But consider the currency risk/return. It’s a complicated move. Also it’s not free to convert inr to usd. Either you pay for it or you less your soul to a Grey market dealer

Inflation is also high hence the declining rate against dollar and high interest rate

Econ 101 - Interest differential will be compensated by the exchange rate. You are not the first one to spot the arbitrage opportunity. What M1 observed should usually be the case.

All of you are hitting theoretically fair points, but untrue in the real world. The exchange rate has been hovering in a tight range for the past 4 years. There is also a very strong resistance at 69. If anything, short the dollar. Attached is a rough graph to show the strong 4 year resistance. Apologies in advance for the blurriness but you can look it up yourself too.

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Kkr: Well you are correct in your observation ( for the time period you chose) but let me offer an even cheaper and frictionless way to make money of this interest differential - fx forwards. They will do the exact same thing and save you tax complications and commissions for currency conversion.

I am not saying that this strategy won’t make money, but that doing this is akin to betting on fx ( which ideally should be left to professionals) - and CDs in India is probably not the best instrument to do it.

Econ 101 - It’s that high because of inflation 😂. Additionally the Indian Rupee has been losing against the USD for the past 3-5 yrs

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