The five highest bank interest rates in emerging markets

Written by Andrew Henderson

Tired of earning tiny interest rates in your local bank? Looking for some of the highest interest rates in the world? If you have a sense of adventure, you can earn high yields in emerging market banks.

These aren’t your average offshore bank accounts. But yields are high. How high? Up to 20% high. Of course, these high emerging market interest rates come with serious caveats: concerns about bank stability, troubled foreign currencies, and even the Mafia stealing your money.

Of course, I’m a big fan of emerging markets and do believe in the safety of banking offshore — sometimes even in emerging markets. You just have to do your own due diligence and decide how big of a risk you’re willing to take for huge yields.

Just a little note: I decided to exclude countries in which you can’t actually open a bank account, such as Iran. Sanctions and all. Iranian banks pay 20% yields… but the flip side is sky-high inflation.

Likewise, Argentina is excluded thanks to its capital controls and the fact that the country is run by a psychopath.

Turkey bank high interest rates

Turkish banks pay some of the world’s highest interest rates, largely on concerns over the Turkish lira’s stability

5. Turkey

Advantages: Large international banks
Disadvantages: Worries about further currency devaluation

The Turkish lira has taken quite the beating lately. And political ridiculousness — like the Prime Minister trying to shut down Twitter — haven’t helped the overall image of Turkey, either. Turkey is home to the second-largest current account deficit among emerging nations, which isn’t helping its currency stability.

However, Turkish banks are paying some of the world’s highest interest rates these days in order to attract deposits in Turkish lira. The concern is that foreign investment into Turkey could dry up and leave the country with no choice but to devalue the lira. It’s a story that’s happened before.

If you’re ready to take the gamble, you can earn up to 10% on Turkish lira-denominated online savings accounts, or 8-9% on general term deposits. The good news is international banks like HSBC offer accounts in Turkey, as do regional players like Garanti, so you should have less to worry about in terms of bank stability.

Uganda banks pay some of the world's highest interest rates

Uganda banks pay some of the world’s highest interest rates and offer the ability to deposit US dollars

4. Uganda

Advantages: Multi-currency accounts, including US dollars
Disadvantages: Corruption and instability

Can you name the currency of Uganda? I couldn’t. But if you’re willing to hold some of your assets in (spoiler alert) the Uganda shilling, you can earn a cool 12% annual yield. Uganda, one of sub-Saharan Africa’s smaller countries, has an interesting place on the map.

To its west are some of Africa’s largest failed states, such as the Democratic Republic of the Congo and the struggling new nation of South Sudan. However, to the east are Kenya — which is trying to reinvent itself as an offshore financial center — and Tanzania.

Deposit some cash in Uganda shillings and you’ll earn 12% on a one-year term deposit at the Bank of Baroda. The bank is actually a state-owned bank of India and the second largest bank there. They even have branches in New Zealand.

The bank also opens US dollar accounts, paying 2.5% interest on one-year or longer CDs. That may sound appealing, but there are better, more stable yields out there for US dollar deposits.

High interest banks in Bangladesh banks

Banks in Bangladesh offer some of the world’s highest term deposit yields for savings in Bangladesh taka

3. Bangladesh

Advantages: Major international banks
Disadvantages: Unstable currency

Bangladesh is about as frontier market as it gets. Just last year, international groups inspected the country’s factories after a huge incident that killed more than 1,000 textile workers.

Yet, some of the world’s largest brands still manufacture there as they address safety concerns in factories. Workers earning $125 a month consider themselves fortunate in a country where farming has had its ups and downs. Just this month, Bangladesh tea prices plunged on concerns over the quality of the tea leaves.

Despite its relatively small size, Bangladesh is one of the top ten remittance countries in the world. It is also one of the most densely populated countries, having broken away from India with a small piece of land years ago. And, currently, banks in Bangladesh are paying annual interest of up to 12% to attract capital in the local currency, the Bangladesh taka.

You can open an account at an international bank with less than $1,000 if you are able to do their paperwork in your home country.

High interest rates in Mongolia banks

Mongolia has long been discussed as the home of some of the world’s highest interest rates on savings. However, the currency has taken a huge slide lately.

2. Mongolia

Advantages: Surprisingly stable banks for the region, ability to deposit in US dollars
Disadvantages: Currency has been crushed, political risks, possible asset bubble

I’ve often compared the idea of Nomad Capitalist to the nomads on the steppes of Mongolia. These nomads follow the herd, going where conditions are best. For some time, Mongolia was a place that treated investors and their capital well.

Just a year or two ago, Mongolia had the world’s highest GDP growth, nearing 20%. Huge mines were unearthed with plans to make the country one of the richest on earth by supplying neighboring Russia and China with raw materials.

While GDP growth is still high, those plans have largely faltered due to political populism and a resources slowdown. Furthermore, the local currency — the Mongolian tugrik — has taken a bath, dropping 50% from its perch a year ago.

Likewise, foreign investment into the country has dropped by more than half. However, depositors can earn annual yields as high as 16.1% in Mongolian banks. Even 30-day CDs earn close to 8%. Not bad for an account that takes all of $11 to open.

To be honest, Mongolian banks are more stable than you might expect for such a frontier market. Liquidity is decent. Goldman Sachs actually owns a small share of one of the “Big Four” banks. And, with one bank, you can actually open an account from home, although the paperwork can be tedious and service is weak.

If you’re afraid to move your money into Mongolian tugrik for fear of further currency devaluation, many Mongolian banks accept US dollar deposits at 6-7% annual yields, or Chinese renmibi deposits paying 3% a year.

Ukraine bank interest rates

Ukrainian banks offer the world’s highest interest rates short of sanctioned nations like Iran. However, there are two big catches.

1. Ukraine*

Advantages: The ability to say you lost your money in an exotic country
Disadvantages: Bank instability, currency instability, sovereign instability

If you’re willing to put up with the hassles of banking in Ukraine, you can avail yourself of some of the highest bank interest rates on the planet. No other country in Europe even comes close. How would you like a 20% yield on a three-month CD? Or a 17% yield on a one-month CD?

Ukraine was paying ultra-high yields even before its run-in with Russia over Crimea, and now yields are higher. Although, 20% in a term deposit doesn’t look too good compared with the 32% yield on government debt. Who worries about sovereign default, anyway?

Unfortunately, there are two major problems. First, Ukrainian banks are often fronts for money laundering. Mafia figures come in, buy up banks and wring them dry.

That’s why I recently suggested Ukraine was one of five offshore banking jurisdictions to avoid. My Ukrainian friends tell me you’ll be lucky to ever get your money out — even if you travel to the local branch to request it, you’ll get a string of excuses.

The second problem is the continued decline of Ukraine’s currency, the hryvnia. As tensions in the region mount, the hryvnia has hit all-time lows against the US dollar.

The hryvnia long traded at 8:1 against the dollar, then briefly slid to 10:1 during the Crimea standoff. Now, it stands at 13:1 with virtually no liquidity in the market. There may be blood in the streets, but Ukraine is one high-interest-rate country I have tightened my stance on. Avoid it for now.

Do I recommend you deposit your money into these high-yield bank accounts? Not unless you understand the risks involved. In my opinion, there are safer alternatives in slightly more developed countries for those chasing yield.

If you’re the truly adventurous type, I do recommend starting a business in one of these frontier markets. For example, a friend of mine in Southeast Asia runs a “bank” of his own, lending money out to farmers at ridiculous interest rates.

In the end, the bottom line is that you can do a lot better with a moderately successful business in an emerging market than hanging your hopes on these interest rates.

Andrew Henderson
Last updated: Dec 29, 2019 at 5:29AM

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15 Comments

  1. International Aggie

    Interesting article, but I urge you to consider the moral dilemma of profiting on providing high interest rate loans to poor farmers because that is their only option. I have worked in this field for a long time and seen how these credit rates can keep people in poverty. Many have no alternatives to purchase the fertilizer and seed they need to make meager crop yields, which barely allow them to repay the loans. They also face tremendous risk and could lose everything. While I dont know the details of your friends scheme, with such high rates being offered, there seems to be room to still make a decent return on investment, while providing farmers with a more liveable, lower-than-market rate. We all want to make a profit, but should always consider the cost to others.

    Reply
    • Darris

      Why don’t you go force his rates down by providing loans at a lower interest than him?

      Reply
  2. GGstreet Peru

    I live in Peru, I was able to lock a 13% in us dollars cd. credit unions pay great rates in Peruvian currency 12% to 20%, the average inflation is 2.5%. And government seems somewhat conservative. The best part is the tax income loophole, for some reason there are not income taxes in interest earned in credit unions.
    Downside is that there is not deposit insurance, you need to be a resident for most credit unions and the stability is as good as any third world country

    Reply
    • nick

      Who would want to invest there then?

      Reply
  3. Dalton

    Consider that the West is pumping in billions of dollars into Ukraine, it isn’t likely to let it fall economically. I would say Ukraine is a good bet for the foreseeable future to drop some coin, Even if it’s month to month.

    Reply
  4. Diana_Luckysova

    have things changed for Argentina?

    Reply
  5. CK

    Who do you bank with?

    Reply
  6. Ruell Bankasingh

    This is really interesting, I find it truely inspiring that andrew has not only created this entire avenue of extra ordinary options, but he did this at a young age and now provides all this wealth of information, that is offered in safe and beneficial ways, its provided in a full light of the circumstance, im truely suprised, from my first reading to my last probably, I read his information and it’s insane, ways that are safe to cut taxes, invest, pure truth, its a risk but can be done, or not worth it, Im sure westly snipes could have benefited from sound realistic strategies, im sure. Anyways thanks alot, the average man wouldn’t know this, because they dont live in this circumstance, even if they have a business, they dont know what to do with the money safely, or if they choose to risk it, either ways they done know if the options, this is eyes wide open information, and everyone that reads it im sure gets something positive from it, thanks alot, your really awesome, if my business picks up, I look forward to hiring you for what I can afford, your like wikipedia, all the best stuff, so I feel I should pay if im in the circumstance to take advantage of these strategic money plays. I know you know alot of people, if you ever end up reading this, try to get the countries to offer security on the investment, then more might want to invest, then they can use it to try to rectify their circumstance quickly, if solveable, I just feel like, something provide like security on investment would really bring in more people, but thats not my circumstance either, so I will leave it up to the pros.

    Reply
    • Irina Loncar

      Thank you Ruell! 🙂

      Reply
  7. S. Gerhardt

    This comment is mainly to relieve pent-up ´PANIC´. My tale of woe is that one year ago I opened two bank accounts in Iran, (since I have family there I was able to do this) one yielding 20% the other 22% – GREAT!! Until Trump turned the world upside-down, with Iran at the centre of the chaos. To be fair though brewing inner turmoil has also played a part in the resulting crashing of the economy and plummeting of the Iranian rial.
    Where does this leave me? Biting my nails to the quick wondering what the hell to do. Frantically doing my maths, I see that what I stand to lose if I transfer it back to my €uro a/c is half of what I originally opened the a/c with, I might as well have kept it here from the beginning and just nibbled away at it instead. And the future looks bleak to boot, with forecasts on Middle East affairs suggesting imminent war with Iran!
    Well, that´s it. If anyone has a fool-proof suggestion for my dwindling assets, particularly Andrew himself, I would appreciate it.

    Reply
  8. adidas tubular x 37

    Write more, thats all I have to say. Literally, it seems as though you relied on the video to make your point. You obviously know what youre talking about, why throw away your intelligence on just posting videos to your site when you could be giving us something informative to read?

    Reply
  9. Prime Bank Ltd

    Completely understand. It’s really interesting and more informative. Prime Bank also deliver flexible, efficient and personalised service, ensuring our customers profit from the best. Keep Sharing…

    Reply
  10. Peter K

    It doesn’t matter even if they are paying 40% or more if the currency is devalued faster. Would you put your money in Venezuelan bolivar even if they were to pay you 100% interest? I guess the answer is no.

    Reply
  11. Constantino de Miguel

    In Ecuador that uses the USD as currency, you have most banks offering yearly rates of 8%, some cooperative banks (associated with microcredits to peasants and small businesses) offer up to 10%. Deposits have a state guarantee until 30,000 USD, most are rated AA- or BB+. The risk is related to the ups and downs of a Latin American economy. Ecuador after the socialists years of Rafael Correa is stable and well managed. The caveat is that if you want to withdraw your assets you have to pay a 5% tax on currency export.

    Reply

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