This is only partly true. I made another post explaining how it is profitable to convert to INR:JR8 wrote:Well in theory if you made (just say) 11%pa with an INR depo account, and 1%pa with a SGD account, that is because those rates have been derived against the expected future values of those currencies. Broadly speaking (very) the valuation models are indicating that the INR will depreciate 10% (11-1%) vs SGD over the course of the year ahead. So, net net what you end up with after one year is the same.Wd40 wrote:Atleast CPF gives you decent returns, but those of us who don't have that privilege/burden(depending on how you see it) and still hold SGD lying in banks with 0.1% interest, is not very clever. Especially if your home currency is a high yielding currency.
http://forum.singaporeexpats.com/viewto ... 9&start=15
Basically interest rates of different countries are set due to various factors like inflation, growth rate, exchange rate volatility etc.
In India's case our growth rate is so high, in 2 years we will exceed China as China is slowing down to less than 7% and we will exceed them. With high growth come high inflation and inorder to tame it you need to set interest rates high.