https://www.treasurydirect.gov/marketable-securities/treasury-bonds/
Maybe USA T Bond better 4.75% annual + Usd/Kes 10% appreciation =15%
Versus
Kenya T bond 15% annual - 10% KES/USD annual currency depreciation=5% with high default risk.
Do you have somewhere I can read up on this type of calculation or analysis. I'm actually thinking of investing money in my Kenyan bank account to hedge against inflation
In 2013,The USD/KES rate was about 84.
5000000/83=$60000.Today,Its almost 160.That means if you invested your 5MN in 10 year Kenya gov bonds,That money would have lost value and would be worth:5000000/158=$31000USD,That is about 5,000,000MN KES.
What if you invested in USA 10 year T-Bond in 2013?Since the dollar has gained value,Your 5000000 x 158 would be about 9,500,000 KES.
That is the principal amount invested.Now lets look at the interest earned.Over the same period,The kenya shilling has on average depreciated by 10% annually since 2013.That means,If CBK paid you 15 % annual interest,if you subtract 10 % depreciation rate,that means you were left with 5 % ROI annually before tax.
Of course it makes sense to buy GOK bonds but if you are in America,buy USA gov bonds,It makes more sense because the dollar gains value,your principal amount gains value.