Carry trading in Turkey - what are the risks or disadvantages aside from currency risk?
If relevant for tax reasons, I live in Germany.
Let’s say I have €100.000. The most interest I can get here is 2.5%, meaning the monthly interest amount would be €208 minus 27% tax.
And now the carry trade in Turkey scenario. I send the money to my bank account in TR. I pay a miniscule amount for the transfer. I convert the money to TRY. The spread is very high between buying and selling rates, around 5%. I have €95.000 now. The yearly interest rate for time deposit is 40%. Let’s just say, 10% for 3 months. I keep the money for that period, get an extra €9.500, pay the %15 tax and just piss off with my €8.075.
I know there is currency risk. But TRY had been stable for around a year now and there are reasons for the government to try to keep it stable for another few months. So, let’s just say I believe the currency will be stable during this period and the risk, I’m willing to take.
What else stops me from carry trading? There should surely be something I’m missing, right? Else everyone would be doing it. Please just talk me out of it.