Rates are a tricky thing in general, it is better to track them. The most favorable rates are often on short-term deposits, up to one month or from one to three months. One can try this method of savings. Of course, they will have to renew the deposit every three months. It is, however, still a “lazier” money management than investing in securities.
Deposit rates raised in summer
The main reason for the increased interest in deposits is obvious. Struggling with acceleration of inflation, the National Bank of Kazakhstan in just seven months, from the end of January to September 5, raised its main base interest rate by 4.25%, from 10.25% to 14.5% per annum. This provoked a sharp increase in interest rates on fixed-term bank deposits. Average rates on household tenge deposits grew from 8.4% in January to 11.7% in August 2022.
It is clear that the growth of interest rates is the main factor explaining the influx of funds in fixed-term individual deposits. This increase will most likely continue, as usually bank deposits grow more slowly in August than in other months.
Inflation has also grown substantially this year. In August 2022, year-on-year inflation was 16.1%. As a result, the real net of inflation average interest rate is in the negative zone, but still compensates the depositor for the impact of inflation.
Deposits in foreign currency almost do not grow due to, in general, low interest rates of 01%-0.2%. However, affluent Kazakhstani individuals and companies keep dollars and euros on deposits. Companies do that to mobilize funds, individuals - not to lose on the constant decrease in tenge.
Besides, interest rates on dollar deposits are also changing. Thus, in August 2022, the rate on individual dollar deposits for a period, for example, from 3 months to 1 year, was 0.8%, and for periods up to 1 month and from one to three months - 0.6%.
Photos are from open sources.