European Union Forums

[Benn]

Can I gamble on the differences between the rate of a loan in one country (example 3%) and the interest rate gained from a deposit in another country (example 8%)?

[Terry]

it's possible, many people used to do that in the past, but you have to organize your work step by step otherwise you will not succeed

[Steven]

never do that. You have to understand that if a country has a high interest rate, its economy is very weak. So consequently depositing big amounts is dangerous.

[Faw_Peter]

about a decade ago, the interest rates in Mexico offered 25-30% a year. So Americans decided to gamble on it. But one reform in the financial sector changed everything and the interest rates went down! Think about it.

[Steven]

what you can do now is gamble on the weak dollar. Many European companies which concluded contracts with American companies now benefit a lot from the poor rate of dollar.

[Faw_Peter]

yes, also many eastern European governments which concluded agreements with Russian gas and oil suppliers received a lot of income due to the weak dollar. It will keep depreciating until the US elections are finished.

[Benn]

Japan is considered to be the country which gives loans at the lowest interest rate, that's less than 1%. But, the problem is that it's very difficult to obtain a loan in Japan.

[Faw_Peter]

Read about how gamblers win in New York as interest rates go up.
http://findarticles.com/p/articles/mi_q ... _n14582793

[M.Helen]

that's nice, but we're not in New York. In poor countries it is more difficult to do that.

[Terry]

there are countries now which offer about 30% on deposit interest rates in local currency. So, you can deposit it, and take loans in dollars. The risk is that those currencies are not stable.

[Hakan G]

Well this story is old enough since currencies like the Mexican Peso started to make unexpected moves. But till then, traders around the world were doing this and making quite a profit, as the peso was depreciating in a continue rate.

[Terry]

is there now a country that is in a similar situation Mexico was those times?

[Nicholas]

If there were we would be knowing that.