# 100K Euro to invest Turkish Lira



## Leonnard (20 Jun 2008)

I have 100K Euro to invest and I have looked at a Turkish bank that is offering 18.25% every 29 days 
only thing is you have to change your money into Turkish Lira to get this rate. Has anyone any suggestions about this. Leonnard


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## sam h (20 Jun 2008)

So thats over 200% a year????  That can't be right!  Turkish inflation used to be crazy, but I don't think it's that high.
Sounds dodgy......remember the old mantra - if it sounds too good to be true, it probably is.


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## cnu (20 Jun 2008)

Euro is stronger currency comparatively, What if you have to buy Euro at higher price?

Try it out with some 40k or 50 K watch out for a year n if it still works out, atleast you'd be right/wrong.  I wouldn't put all eggs in one basket!

Again, high risk high returns :~)


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## z109 (20 Jun 2008)

Turkey has in the past devalued the lira over-night. You could see your bet halved or more. 

You may also want to consider what deposit protection there is in Turkey should a bank go belly-up.


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## ClubMan (20 Jun 2008)

Also - interest on such foreign deposits may be assessable for income tax (up to 41%) rather that _DIRT_ (20%). So:


Is the rate that you mention correct and genuine?
What depositor protection applies?
You are facing foreign exchange currency fluctuation risks
You may be facing higher tax than on local deposit interest


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## jhegarty (20 Jun 2008)

sam h said:


> So thats over 200% a year????  That can't be right!  Turkish inflation used to be crazy, but I don't think it's that high.
> Sounds dodgy......remember the old mantra - if it sounds too good to be true, it probably is.




Isn't it actually over 700% aer because its compound ever month  ... sounds like a scam to me , op do you have a link ?


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## Leonnard (21 Jun 2008)

Hi, My fault it's 18.25% P.A. 29 days notice is required to withdraw your investment
but you can draw down on your interest when ever you wish
here is a link www.garantibank.com 
Thanks to everyone who has replied so far


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## z109 (21 Jun 2008)

Garanti bank are one of the main turkish banks, so it is not a scam from that point of view. The other points raised re: devaluation of the currency, forex risk, taxes, and deposit protection all still apply, though.

In terms of the political situation in Turkey, if the supreme court declares the ruling party to be unconstitutional, expect a period of turbulence (!). This may have negative effects on the exchange rate and the stability of the currency/economy.


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## BallinaTipp (27 Jun 2008)

Buyer beware!


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## harshad910 (12 Feb 2009)

*Tax Benefits*.It is'nt a bad idea to invest in Euros to save taxes on euros and to buy Turkish liras especially If you want to recieve an tax break.Except for the fact as per the Turkey tax laws,Your any type of income derived from old turkish liras (TRL) are non-taxable or completely tax-free money assets and on New liras (YTL), it is taxable.


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## Sherman (12 Feb 2009)

Well done on dragging up an old thread and making a totally incomprehensible post.


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## harshad910 (19 Feb 2009)

Well,That's true,old Turkey Liras (TRL) are acceptable worldwide indefinetely being of Gold standard currency value as compared to New Liras (YTL) which is limited only to Turkey and few other countries.Both are equal in its value and exchange rate in terms of other currencies.Always remember the saying "Old is Gold".


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## Boros (18 Jan 2010)

HI 

I work for a currency broker and i know of clients that have taken advantage of the extremely high interest rates in turkey, and currently get an interest rate of 10% p/a.

and due to the Turkish currency is very unstable he converts sterling into Turkish Lira and leaves it receiving 10% a year and when the currency moves back to a favorable rate he moves it back into his own currency. 

As he is receiving 10% interest + 2% currency swings he makes a few bob.


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## Lightning (18 Jan 2010)

How easy is it for a retail investor to do a TRY EUR hedged forward? 

Which brokers would offer this option?


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## fiatmoney (19 Jan 2010)

fungus said:


> How easy is it for a retail investor to do a TRY EUR hedged forward?
> 
> Which brokers would offer this option?


 
worldspreads states on thier website that they will consider any request for hedging foreign currency.

[broken link removed]


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## Boros (19 Jan 2010)

fungus said:


> How easy is it for a retail investor to do a TRY EUR hedged forward?
> 
> Which brokers would offer this option?




Yes it is pretty easy, i work for a currency broker called [broken link removed] and it has been done here a few times with great success.


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## Complainer (19 Jan 2010)

oroborosFX said:


> HI
> 
> and due to the Turkish currency is very unstable he converts sterling into Turkish Lira and leaves it receiving 10% a year and when the currency moves back to a favorable rate he moves it back into his own currency.


So it all a gamble, based on the assumption that it will move to a 'favourable rate'. What happens if it never hits that 'favourable rate'?


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## Boros (19 Jan 2010)

you are right it is speculation but it all comes down to timescale and scope.

you are receiving 10% interest and if you are able to leave it there until the market moves in the right direction, but if doesn't move all the way to your desire rate you would lose a fraction of your profit but due to the interest you are more likely to be within in a profit. 

as currency is not like betting i.e you will allways get back the majority (97%) of your money even if it moves against you.  And if you add the interest you received, worst case scenario you are not going to be far wrong. 

i am not advocating this scenario but i have helped a few people do it and it has reaped decent results.


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## Complainer (19 Jan 2010)

oroborosFX said:


> you are receiving 10% interest and if you are able to leave it there until the market moves in the right direction, but if doesn't move all the way to your desire rate you would lose a fraction of your profit but due to the interest you are more likely to be within in a profit.


And what happens if it keeps moving in the wrong direction?


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## Boros (19 Jan 2010)

if it keeps moving the wrong direction you get out i.e exchange it back into euros.

you would have already specified the levels before you go into it.

So before doing anything you know your worst case and best case sceinareos,


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## Complainer (19 Jan 2010)

oroborosFX said:


> if it keeps moving the wrong direction you get out i.e exchange it back into euros.


At a loss, right? Just that the way you outlined it, it seemed to be a guaranteed winner.


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## Boros (19 Jan 2010)

no no ....... is there ever such a thing. =) 

it is however a pretty good money spinner with limited losses. If it goes against you with the interest you receive, you are likely to end up close to what you started with, with the potential of making a few bob.


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## Complainer (19 Jan 2010)

oroborosFX said:


> it is however a pretty good money spinner with limited losses. If it goes against you with the interest you receive, you are likely to end up close to what you started with, with the potential of making a few bob.


Sorry to labour a point, but this depends greatly on how far it goes against you. If it goes against you by more than 10%, then you don't end up with what you started out with.

What kind  of fees/commissions will brokers take out of these transactions?


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## Boros (19 Jan 2010)

it all depends on timescale 

Currency's fluxuate all of the time (particularly TRY) as you know and within a month period the rate may decline 10% and the increase 15% thus giving you scope to buy low and sell at the top. 

It is a waiting game .... yes there is the small potential that it may take months for the rate to return to an acceptable rate but you would be still getting the 10% interest.

It is not for anyone who cannot be flexible with their funds. 

only fees would be on the currency transaction, depending off the amount around 0.5% off interbank, of which would be factored into the rate at his end so wouldn't be taken out of the clients profit.


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## Complainer (19 Jan 2010)

oroborosFX said:


> it all depends on timescale
> 
> Currency's fluxuate all of the time (particularly TRY) as you know and within a month period the rate may decline 10% and the increase 15% thus giving you scope to buy low and sell at the top.
> 
> ...


You seem to be determined to spin this as a 'no lose' option. I would expect that any serious investor would take you more seriously if you are serious about the risks involved. It is not just a matter of timing. There is a real risk that the rate will decline, and will not recover - ever. 

if there was a guaranteed 10% rate available, every investment fund in the world would be beating a path to your door. They are not, for good reason.


oroborosFX said:


> only fees would be on the currency transaction, depending off the amount around 0.5% off interbank, of which would be factored into the rate at his end so wouldn't be taken out of the clients profit.


Again, this sounds like spinning to confuse novice investors. What exactly do you mean by 'factored into the rate at the end so it wouldn't be taken out of the clients profits'? How can the broker take any fee without it coming out of the clients profits? What happens to the broker's fee if the client doesn't make a profit?


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## Boros (19 Jan 2010)

thanks for your reply complainer

 firstoff i would like to stress that it was not my intention to spin this as a 'no lose' option as with any investment there is always a proportion of risk involved , and if it has come off like that i apologize. 

you are right , there is a risk that the rate will decline and not recover but going on the last 9 months (which has been quiet extraordinary as we all know) the rate has increased and decreased many times allowing this option of work.

i personally have not got an interest account in turkey at 10% or at any rate but i have been told by two separate individuals that i have done business with that this is the case, which i believe. 

I do not know of the T and C's of the accounts, but i would imagine that the 10% would only be offered for a full year of cleared funds and be reduced if the funds were taken out after 6 months for example.

With regards to your query about the currency transaction,  this is something i am 100% certain of. 

Say the current exchange rate is2.084 TRY for 1 Euro which is currently close to

if we were waiting for the rate to move to 2 try for 1 euro to move all of the TRY into euros.

to obtain this rate for the client the actual exchange rate would have to get to 1.99TRY to Euro.  

There for this does not cost the client anything as he would receive the correct amount of Euros that he wanted and the FX broker receives his 0.5% fee.

I hope this has cleared up some of your questions


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## Complainer (19 Jan 2010)

oroborosFX said:


> thanks for your reply complainer
> 
> firstoff i would like to stress that it was not my intention to spin this as a 'no lose' option as with any investment there is always a proportion of risk involved , and if it has come off like that i apologize.
> 
> you are right , there is a risk that the rate will decline and not recover but going on the last 9 months (which has been quiet extraordinary as we all know) the rate has increased and decreased many times allowing this option of work.


Thanks for the clarification.



oroborosFX said:


> With regards to your query about the currency transaction,  this is something i am 100% certain of.
> 
> Say the current exchange rate is2.084 TRY for 1 Euro which is currently close to
> 
> ...


Unless I'm misunderstanding something, it is nonsense to suggest that this does not cost the client anything. It costs the client the difference between the 2.00 and the 1.99 rate. Any money the broker makes comes from client. The client also suffers the risk that he now has to wait for the rate to hit 1.99, instead of executing at 2.00. It is indeed possible that it would never hit 1.99, and he could end up losing on the entire transaction because of not getting out at 2.00

I'm not suggesting that there is anything wrong with the broker charging a fee, once it is detailed up front. The days of trying to hide fees are gone (I hope).


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## Boros (19 Jan 2010)

i agree with you completely that it is correct that  "there isn't anything wrong with the broker charging a fee, once it is detailed up front". With something like this it could only work if both sides knew exactly what was going on at all stages and the risk involved. 

But if it all goes as planned , technically the difference in exchange rate does not cost the client anything in monetary terms, (if anything very little) you are right that they do have the risk that the rate would not hit 1.99 but as said before the investor and the broker would know this upfront. 

And if it didn't look like 1.99 was going to be hit, the investor would have to make a decision to buy at 2 and receive 2.01 or to wait and hope it does.


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## callybags (20 Jan 2010)

Kauto Star was mentioned in another thread recently....


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## Boros (20 Jan 2010)

one other thing that might be a problem is being able to open an account in turkey as have heard from other people that you need to open it with an Turkish address.  OmnisFX is the broker than i have seen this done with.


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## Lightning (20 Jan 2010)

darren10 said:


> Garanti Bank are probably the biggest bank in Turkey so I wouldn't be too concerned about that. They are probably more secure than the Irish banks!



Thanks, a few questions ...

Has anyone any experience with opening a bank account with Garanti Bank? How do you start the process? Do you ring them and ask for a non resident application form?


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## bigred (21 Jan 2010)

If you hedge the EURTRY forward you will pay away the EURTRY interest rate differential / pickup.. e.g. EURTRY spot = 2.08. I year forward = 2.23 so if you were for example to...

1) Covert EUR to TRY
2) Put TRY on deposit for 1 year
3) at the same time agree a 1 year forward FX rate to covert you expected TRY deposit proceeds back to EUR

...then you will end up in no better position than just putting EUR on deposit to begin with. In fact you will end off much worse as you will be hit with and FX spread on both sides of the EURTRY. 

The most efficient way to exploit this type of 'carry' trade is to simply put you EUR on deposit and overlay it with a CFD for a EURTRY forward. The forward rate you achieve will incorporate the interest rate differential i.e. the forward rate you get will be well above the prevailing spot rate. When the CFD matures it will be closed out at the prevailing spot rate and provided it has not risen beyond your original forward rate you will secure a profit. Another way to look at it is the interest rate differential you earn is your cushion against FX movements, provided the 'carry' you earn is > than any spot movements again you then the strategy pays off. 

Carry trades like this are highly correlated to equity or broader ‘risk’ movements so if equities are to tank expect this trade to blow up!.. be warned. Same goes for all the very high yielding currencies e.g. ZAR, BRL etc..


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