Nomad Capitalist: The Most Stable Exotic Currencies for High Interest Rates

Holding cash in foreign jurisdictions allows investors to optimize returns, with well-positioned emerging market banks offering significantly higher interest rates on base currencies like the US dollar (USD) and euro compared to Western institutions. For investors seeking maximum, sometimes double-digit returns, holding local emerging market currencies can yield high payouts. While this approach carries elevated currency and jurisdiction risks, historical data from a five-year lookback period between January 2015 and January 2020 highlights a few exotic currencies that remained resilient against the USD.

Top-Performing Emerging Market Currencies (2015–2020)

During this five-year window, several global currencies experienced severe devaluations—including the total collapse of the Turkish lira, near-all-time lows for the Colombian peso, and sharp downward spikes for the Egyptian pound. However, a handful of specific currencies countered or resisted this downward trend.

Russian Ruble (RUB)

The ruble was one of the strongest performers against the USD during this timeframe, achieving a 10% appreciation.

• Exchange Rate Shift: Moved from 69.2 RUB per USD in January 2015 to 62.6 RUB per USD in January 2020. This recovery followed a steep plunge into the low 80s after geopolitical events in Crimea around 2014.
• Yield Potential: Term deposits offered interest rates of 7% to 8%.
• Accessibility: Investors do not necessarily need to bank directly within Russia; banks in neighboring countries like Armenia and certain Central Asian nations frequently offer ruble-denominated accounts.

Cambodian Riel (KHR)

The riel functions on a managed float tightly linked to the US dollar, typically hovering around a 4,000:1 ratio.

• Exchange Rate Shift: Started at 4,062 KHR per USD in 2015 and concluded at 4,057 KHR per USD in 2020, representing a negligible variance.
• Yield Potential: Depositors could earn between 5.5% and 6.5% (potentially up to 7% for two- to three-year terms). This outpaces Cambodian USD deposit rates, which fell to the 3.5% to 4% range from historical highs of 6%.
• Caveats: Moving capital into and out of the riel requires a round-trip currency swap, introducing conversion costs. Additionally, foreign depositors must hold a proper local visa to open accounts.

Armenian Dram (AMD)

The dram maintained an almost flat trajectory relative to the USD over the observed five years.

• Exchange Rate Shift: Moved minimally from 476 AMD per USD in 2015 to 478 AMD per USD in 2020. It significantly outperformed the neighboring Georgian lari.
• Yield Potential: Local banks offered high interest rates ranging from 9.5% to 10.5%. Foreigners can open accounts, though specific administrative formalities apply.

Ukrainian Hryvnia (UAH)

The hryvnia represents a highly volatile, high-yield historical example rather than a stable haven, characterized by structural issues in the local banking sector.

• Exchange Rate Shift: Declined roughly 9% over the period, moving from 22.5 UAH per USD to 24.6 UAH per USD, with significant mid-term volatility and a major downward spike.
• Yield Potential: Offered one-year term deposit rates as high as 15.5%, which historically offset the currency’s depreciation value loss, though it carries substantial risk.

Secondary and Structural Trend Wildcards

Evaluating emerging market deposits requires looking beyond surface interest rates to evaluate macroeconomic trends and sudden structural adjustments.

Chasing a 15% interest rate without understanding the underlying local economy or the risk of sudden, single-event currency devaluations can result in severe capital losses. Historical performance during this specific window does not guarantee future stability.