The sovereign credits of Argentina, Ecuador, Pakistan and Ukraine have risen more than 100% year to date on benchmark JPMorgan's Emerging Market Bond Index Global, or Embig. Other impressive gainers include the Dominican Republic, Ghana, Iraq, Serbia and Venezuela.
Investors and market analysts aren't sweating yet. Many say the levels are reasonable, and there is even potential for further advances. A big correction isn't likely, they add, though a modest one is possible. They point out the gains appear outsized given the historic plunges a year ago. Clearly, the problem has gone from, 'What do I sell in order to raise the cash I need?'...to, 'Oh my gosh, where do I put the cash that's being thrown at me,' said Michael Gavin, head of emerging-markets strategy at Barclays Capital. The focus turns from fears of downside risks to upside potential. Mr. Gavin said Barclays Capital doesn't believe current levels have risen to bubble-like levels, but the odds are very high that we will. So far this year, Argentina has advanced 136% on the Embig, while Ukraine rose 112%, Pakistan rose 163% and Iraq gained 94%. Overall, the index has gained 28% this year.
Ultimately, Mr. Gavin and others say, asset prices are defensible, particularly as many sources of money have yet to re-enter the market in full position, including hedge funds and individual investors. The move in these low-grade bonds, which some call junk, comes amid a broad repositioning into riskier assets, including commodities and investment-grade emerging markets such as Brazil.
Emerging-market funds have absorbed more than $40 billion so far this year, according to fund tracker EPFR Global.That means that last year's outflow of $40.1 billion has been completely erased said Andrew Howell, an emerging-markets strategist at Citigroup. We tend to get nervous when inflows surge, suggesting excessive optimism. However, at this point it seems early to get too worried.
31 October 2009
Emerging-Market Debt Boom Signals End of Crisis
Ukraine’s banks start to lower interest rates on hryvnia deposits
One cannot say that now a common trend of interest rate falls in banks is seen. It's likely that the trend is the following: some large banks launched short-term deposit products in hryvnias with interest rates that were higher than those on the market, and now they have fallen to a market level. A fall in interest rates is seen not for all deposits, and the trend affected only those deposits with the shortest terms - up to one month. As for our bank [VAB Bank], we had interest rates that were at the market level, now the bank is not cutting rates said Tsvetan Tetrinin, deputy chairman of VAB Bank for retail business.
Kyrgyzstan to obtain sovereign credit rating.
A "B" credit rating would match the 10% p.a. USD deposit rates available from Banks in Kyrgyzstan.
30 October 2009
Nepal - up to 9% p.a.
In Nepal, Indian Rs 500 and Rs 1,000 notes are not accepted. So, Indians carry Rs 100-notes. Everywhere you can pay in Indian Currency. The exchange is as follows: IC 100= NC 160.
Pakistan Deposit rates up to 13% p.a.
27 October 2009
Russian bank offering 11% p.a. for EUR deposit
Sent 28 October 2009 : Thank you for your interest in our services. I am glad to confirm that the interest rate for EUR is 11.0% per year for 18 months.
This interest rate is valid for any sum exceeding € 100 000.
The standard interest rate within EUR for deposits
under € 100 000 amounts to 10%. But, as soon as your client has decided to
open such a time deposit with our Bank, he immediately gets a Platinum
status. That is why we would like to offer him to take an additional advantage
(+1%) and to gain some extra returns. - The Head of Client Department.
South Africa interest rate unchanged at 7%
26 October 2009
How to make money from Aussie interest rates
Vietnam banks pushing up interest rates in hopes of luring deposits
It’s generally understood that SBV wants to keep loan interest rates low. However, banks still keep raising deposit interest rates.
The Bank for Investment and Development of Vietnam (BIDV) and Agribank, which typically do not join the ‘interest rate race,’ nudged up their rates last week, following the lead of private sector banks. The two state-owned banks are now offering annual interest rates on two year Vietnamese currency deposits are now about 8.8 percent.
1001 reasons behind interest rate hike
Explaining the interest rate increases, bankers say that they need more capital to get ready to lend in the event that the Government announces another economic stimulus package. They argue as well that they must offer high interest rates to retain depositors, who would otherwise leave banks for the stock market or real estate market in search of more attractive profit.
Yet another reason offered is that banks are intent on mobilizing long term capital at what they consider to be a lower cost than they will have to pay in the future.
Banks may want to secure long term deposits to support long term loans, but depositors seem only willing to make short term deposits. The banks’ strategy is evidently to sell depositors short term notes now and later to offer them other incentives to persuade them to roll over these deposits at maturity.
More harm than good?
Industry experts have warned banks against engaging in a cutthroat interest rate race. Many have pointed to the central bank’s decision to hold the basic interest rate at seven percent for October 2009 as meaning that it wants commercial banks to keep low interest rates to provide low cost capital to the economy.
The deposit interest rates now being offered seem high if in fact and as predicted, price inflation will be held to seven percent or less in 2009. However, noting the attraction of the stock market and real estate ventures, Duong Thu Huong, Secretary General of the Vietnam Banking Association, said that banks are finding difficult to attract capital even when they offer deposit interest of 10.5 percent per annum.
Ho Huu Hanh, Director of the HCM City Branch of the State Bank of
25 October 2009
Belize - High Interest Rates are Crushing the Working Class
Malta - EUR 2 year deposit 3% p.a.
23 October 2009
Moldova - the hidden strong currency with high rates
Strong and stable currency.
Subsidiary of Society Generale.
22 October 2009
Ukraine drops rates - Indonesia banks coerced to drop rates
- Ukraine October 2009 - Ukraine’s banks have started to lower deposit rates cutting interest rates on short-term deposits in hryvnias and on one-year deposits in foreign currency.
- Indonesia Aug 2009 - 15 Large Banks Agree To lower deposit rates but so far have been slow to implement.
Russia - Economy improves
19 October 2009
Tajikistan - 18% p.a for USD
Russia - Ruble deposits around 15% p.a.
Dominican Republic - 12% p.a. for Peso
Armenia - 10% p.a. for USD / EUR
Non resident withholding tax on interest is 10%, meaning foreigners will net 9.0% p.a.
Moldova - 16% p.a. in MDL
Russia - 12% p.a. for USD deposits
However you have to open the account in person or get a representative to do so on your behalf. Also your passport has to be translated into Russian, and then the translation must be certified by a notary. Then you must go to a local municipal or provincial office to get the certified document stamped with an apostille of the Hague. An apostille means the state verifies that the notary is on the official list of those who can certify copies.
New Zealand highest deposit rates - over 10% p.a.
It's easy for foreigners to remotely open accounts.
Azerbaijan high interest rates
And its easy to open accounts without visiting the country.
Highest deposit interest rates in the world
I will discuss how as a foreigner you can open these bank accounts. Also relevant will be the applicable withholding taxes, deposit insurance schemes and the credit ratings of these banks.
More is available from my site.