I know it looks tempting to get 15-17% when you would be looking at 6% in the UK, but the difference is for a reason. the YTL is higher risk. Interest rates need to be high to offset the risk of currency instability which as you know has a long and inglorious history in Turkey, with the major banks cashing in at the expense of the general population. (investing their own money in currency speculation, in effect betting against the lira which was a contributory factor in its decline - like a horseowner picking his jockey with a wink, then betting on other horses in the race).
Inflation is on the rise around the world, with the stronger developing economies, like Turkey, among the worst affected. It's lovely to get the equivalent of £17k pa instead of £6k, but what about when your £100 k in YTL becomes worth £50k? £5k? £500? £5.
Could it happen? I first came to Turkey in 1979. The old TL stood the day before I arrived at 25 to the pound. The next day it underwent a 100% devaluation. When I passed back through a few months later it was around 80. On my honeymoon it was around 850. A couple of years later 1500. From there you know where it went - to south of two million to the pound. At that time it was the world's least valued currency unit and declared a matter of national shame by Mr Erdogan.
Lightening does strike twice in the same place.
The chart here shows a decline by a factor of 150,000. Converting your £100,000 back to sterling would net you 67p.
Conversely, if you stay in Sterling, you will be largely immune from the effects of Turkish devaluation. Of course you will still need to find an interest rate higher than inflation in the UK to give you a real rate of return, but you don't have to put all your cash in... well, cash.
See the slide.
It may not happen, but before you make such a huge financial manoeuvre, best to take at least a glance in the rear view mirror.
* 1966 — 1 U.S. dollar = 9 lira (TL)
* 1980 — 1 U.S. dollar = 90 lira (TL)
* 1988 — 1 U.S. dollar = 1,300 lira (TL)
* 1995 — 1 U.S. dollar = 45,000 lira (TL)
* 1996 — 1 U.S. dollar = 107,000 lira (TL)
* 2001 — 1 U.S. dollar = 1,650,000 lira (TL)
* 2004 — 1 U.S. dollar = 1,350,000 lira (TL)
* 6 May 2008 — 1 U.S. dollar = 1.25 lira (YTL)
Does the Turkish government anticipate a resurgence in inflation? Who knows, but on the 1st Jan 2009, there will be a new highest banknote - the 200YTL.
New highest banknotes. Ring any distant bells?
Good luck and think carefully. If you're unsure, you could put a small slice in the higher yielding Turkish account and see how it goes, but remember - eggs? baskets?