Will do. @Bob - yeah I figure the FX is going to play in my favor when it's time to pull the money out... still might consider hedging it though. @peil - I'll look into that but really not interested in gov't debt. Indian banks need money to meet reserve requirements to keep up with a growing economy. The high interest rate is not based on low quality... it's based on demand.
You basically have to be an indian citizen or what is called an NRI (an offspring of a current or former indian citizen). If you are Indian by race then you can apply for an NRI account even if you don't live in India. It's a great system. My wife is indian and she has money in india and has invested in an index arbitrage fund that pays here 10%/year (Shorting isn't allowed so banks with stock inventory have a huge advantage over everyone else). She doesn't care about the fx risk because we use the money in india.
you can look on those % all day long,but 1) as been mentioned above already-in most cases you must be a citizen of this country. 2) have a local permanent address. 3) no,you can't open an account online. you have to be physically presented in the branch. 4)if you that the open an account is piece of cake-think again. and after all this there is another host of different problems..moving money out of USA,into USA, reporting taxes and foreign accounts,bank failure risk and off course the currency risk, that already been mentioned above. if this is isn't enough, then go for it.. good luck!
Exactly. Short a small USDINR position. It's all the upside w/o any regulatory hassles. You're long INR whether you own the notes or simply earning the FX swap via short USDINR. The OTC spread on USDINR is 80-100 pips.
As atticus mentions, it's all about FX... You're being compensated for running the exchange rate risk. If you feel this compensation is adequate, by all means go for it.
interesting list which doesn't include Brazil and most under South American countries. any idea why this is the case?
Need a strong bank.. maybe HSBC to setup a sweep account moving funds from an Indian account to a Brazilian account and back each day. Should be able to collect interest on both sides... 20%+ annual return would be worth the effort.