Most Latin currencies are holding well versus the Doller, but for example Argentine Peso has devalued from 25 to 28 in just a week. That's after a substantial hike in the beginning of May from 20 to 25. Before that, it dropped from 17 in the beginning of December 2017 to 20 in April.
Going from 17 to 28 in just 6 months... Dominican peso is not doing that bad compared to ARS. If mods allow it, I would like to hear Playacaribe's take on why ARS devalued so much in the past 6 months.
Argentina has not learned any lessons. Of all the countries in LA they have one of the worst default records.
They have again, via a web of institutionalized government policies that have plagued the country no matter what type of government is in charge, managed to achieve high levels of debt and slowing growth. So to combat that they at first lowered interest rates and when growth did not materialize, but debt climbed.....(that debt is denominated in dollars).........they printed more money to service that debt.....all the while devaluing the peso........and creating inflation.
This was pretty much the same script the DR tried and that failed in the early 2,000's. The final catalyst for near collapse, including a mismanaged economy, came when it was discovered Baninter, the countries second largest commercial bank was also involved in some shadow banking and there was some serious embezzlement/fraud issues implicating amongst others the infamous Pepe Goico............and its (Baninter) failure would have brought the whole country to its knees......but for a rescue by the IMF.
But in Argentina's case it is not a bank bringing it down but mismanagement and world commodity prices......and now a strengthening US dollar.....................but the bulk of the blame belongs to former Argentine President Cristina Fernandez and her populist social welfare policies, money printing and interference in the economy....are the real root causes.
And the same scenario is also playing out elsewhere in LA.........Venezuela and to a lesser extent Brazil.
Fortunately the DR has done a better job economically than Argentina, Brazil or Venezuela..........but that does not mean they are not vulnerable.............just one of the better houses in a bad neighborhood...........but they still cannot escape some pain from rising interest rates in the US..........and the reason why the peso will move toward 50, not with lightning speed, but perhaps in a quicker pace.
Respectfully,
Playacaribe2