So we know the peso is going down but who is winning and losing?

ltsnyder

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Jun 4, 2003
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I know there are some obvious factors to this, like the people who have to pay for gas for thier stove, electricity and phone are losing if thier pay is fixed in pesos. But I guess what I would like to hear is what businesses do you see as booming and what businesses are suffering.

From what I see, the All Inclusive Resorts are benifitting the most, I am familiar with Playa Dorada in Puerto Plata. I know that is doing well. I'd imagine the same for Punta Cana and La Romana. From what I have herd and seen a little Satiago has been economically depressed (I'd like to here if a business is doing well there). And maybe some midsized tourist complexes right on the beach in Sosua have been manageing fairly well. But what have you seen? If something good is to become of this I'd like to know what businesses are making out well.

From what I hear farming is under harsh economic pressure, and the government makes low rate loans to provide power to the farms for farm product processing.

And dispite the economic downturn, the local retail outlet in Puerto Plata "Casa Neilson" seems to be doing well no matter what happens.

-Lee
 

samiam

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Mar 5, 2003
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Exporting businesses, like for the Cacao, sugar, bananas, and other etc. are doing quite well since they sell their products abroad in dollars and euros and they pay for the crops and their employees in pesos at the current x-rate. I have a good friend ion the cacao sector who is doing quite well selling raw material to Hershey's.
Its kinda exploitive, but what isnt in this island?
 

Robert

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Jan 2, 1999
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Any business that has an income in US$ and the majority of its expenses are wages in RD$ is doing very well.

e.g. Free Zone customer support businesses.
When your paying your staff RD$50/hr and billing your clients US$8 (RD$400)/hr you have to be making money.

The farming sector is being killed right now, especially those farms that import products and services to make their farms run.
Fertilizers, chemicals, machinery, parts etc are not cheap, plus you have to contend with customs etc.

I'm just happy that we are in the service sector and run a very lean operation.
 

Robert

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Jan 2, 1999
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samiam said:
Exporting businesses, like for the Cacao, sugar, bananas, and other etc. are doing quite well since they sell their products abroad in dollars and euros and they pay for the crops and their employees in pesos at the current x-rate. I have a good friend ion the cacao sector who is doing quite well selling raw material to Hershey's.
Its kinda exploitive, but what isnt in this island?

Actually this is not always true. They also import products to make their businesses work.

If your lucky, one of the largest farmers and exporters in the DR (also a poster) might even tell you why they are hurting so much right now.
 

DCfred

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Jun 19, 2003
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If business people came together, they could create their alternative to the peso- the Dominican version of E-gold. The benefit of this is that the value of accounts would be based on the market value of Gold, backed by real gold holdings, and people could exchange goods and services based on a predictable baseline. Egold already functions quite well in the US and Europe as a means of exchange and as a way of servicing debt payments.

The actual Gold holdings would be held outside of the DR, either in Europe or USA, but holders in the DR, as long as they had accounts, could pay each other, service debt payments overseas and borrow, all based on the equity they have in Gold. There would be no black market and would not matter how many inorganicos the fools at the Central Bank print. Gold is gold and everyone knows the real value of it.

Anyway, food for thought.
 
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Ken

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Jan 1, 2002
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The real losers are the majority of the Dominican people. Prices have skyrocketed, as have electricity and fuel costs. If they are lucky enough to have jobs, they are probably making about what they were making a year ago when rate of exchange was 20 to 1.

Although it is nice to get a bundle of pesos when you change money, I would prefer to see a lower, stable rate of exchange. Better for everyone.
 

samiam

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Mar 5, 2003
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Robert said:
Actually this is not always true. They also import products to make their businesses work.

Obviously it varies depending on the type of product you sell. If you sell crops such as aguacate, mango and bananas abroad, these products tend to be sold fairly unprocessed, practically just packaged. In the case of cofee and cacao, the material goes thru a very basic process of preparation before its shipped out.

The companies that sell these products abroad are mostly brokers (font&Gamundi, Comercial Roig, Rizek, etc.) and they buy their merchandise in RD$ and sell them in the states at market prices.

Yes, the market prices of cacao and coffee are not exactly to go crazy over but with the x-rate gap between the peso (currency used to pay for your products) and the dollar (currency in which you are paid in) widening its not a bad business at all.
 

AZB

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I just had a long talk with a PLD official today in my office. This man is very closely associated with Leonel Fernandez and was appointed a very important position during leonel's term. He tells me that things will change as soon as PLD will come into power. They have economical reform plans in mind to settle dollar at 20 plus points below the current rate. He was very optimistic and so was I after seeing his confidence in the future.
Lets hope PLD would win without any fraud from PRD.
 

XanaduRanch

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Sep 15, 2002
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I Hope Not!

Settling the rate? OK. I can live with that. Bit dropping it 20 pointsbelow 50? No way! Not unless they have a 'plan' for instantly making prices on everything else drop at the same time! Lots of things I buy have gone up faster than the devaluation. I am not making out like a bandit with the peso dropping. I can about keep even. If the peso gains 20 points and the proces stay the same I will lose a great deal ofmoney I don't have to lose.

We need stability!

Tom (aka XR)
 

Lurch

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Aug 8, 2003
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doubts

First, if the intention is to settle the exchange at 32 +/- they are going to need to remove the MASSIVE inorganic currency currently in the market. Why is it I doubt that shall occur? Who is going to finance it?

Second, the Dominican Economy shall need to finance the debt undertaken by the PRD. Why is it I doubt that is feasible?

Third, the political consequences of undertaking the program that would be required to stabilize economy are significant. Elimination of subsidized energy? Taxes on remittances? Income tax? Fortune tax?

Fourth, the lack of competitiveness in Dominican businesses. Without significant protection the free trade agreement will annihilate local businesses. If they resist free trade they face severe even economic more consequences especially with the IMF and foreign note holders.

Optimism and confidence are one thing, reality is quite another.
 
Oct 13, 2003
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No trade agreement would be better

No to any treaty!

Given the current economic situation in the DR. You have not the capital needed, nor access to investment capital to make this work for the DR! If the markets open up now we can see the following scenario:

1) Identification of weak sectors and direct import from the USA (i.e. agriculture). The locals would get cheap imported food, but would see their agriculture sector be gutted (see Colombia) and a lot of jobs will be lost. As a result many subsistence farmers will loose their land and their jobs. They will migrate to the cities and add to the problem of the urban poor.

2) Since the locals cannot attract investments due to their poor credit rating, investment companies will buy the wortwhile assets at rock-bottom prices and start producing for the US, whether in factories or on platations (i.e. United Fruit, manufacturing). The locals will get minimum wage jobs and profits disappear in stockholders pockets. Profits will be funneled offshore and taxes will not be paid to the DR government, leading to a deterioration of the tax-base.

3) The import tax received by the government is currently higher than the export tax paid towards the US. The government will lose additional income in a time they need every dollar they can get. This will affect their tax-income and the ability to repay any outstanding loans.

All in all the local economy will be gutted and the island left with a lot less income in the form of taxes, wages and profits than is currently the case (see also the article from Frederic on this).

It is much, much better to exploit the low wage leverage from the DR towards the US and EU and to develop at a slower pace than to sell out completely.

I think Porfio should agree with this, not?

MD:angry: :mad:

This nonsense treaty must wait until access to investment capital is available to Domenicans as well!
 

Criss Colon

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Jan 2, 2002
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The Government can "Set" the rate at 1 to 1 if they want to!

It doesn't make a damn bit of difference! The "Peso" will find the rate where it is "comfortable! Just as it is "Searching" for now!The peso/dollar exchange rate has now entered the "Twilight Zone" of speculation!
When I got 45 to 1 on Monday,up from 42 on Friday I was ecstatic! It is at 49 to 1(and More!) today!That is a 4000 peso difference on 1000 US in 4 days! That is what most Dominicans earn per month!!!
You want to know who is "hurt" and who is "helped" by the 150 % devaluation in the Dominicon peso "vis-a-vi" the US Dollar in the last year?(Jan.03,20 to 1......Jan.04,50 to 1)

You have dollars,you win!
You have pesos,you lose!

CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
 

Texas Bill

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Feb 11, 2003
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It appears to me that "Dollarization" of the economy is foretold by today's exchange rates!

If the economy suffers further depreciation of the rate of exchange (whether driven by speculation or by real rates) then the government must eat it's own lunch and capitulate to the world market in it's esports!
Such a scenario is inevitable in the long run! Regardless of the manipulations evisioned by the existing government, whether it be "Hipolito's or Leonel's)!
The present situation is one of lost trust in the ability of the economy to recover under existing circumstances (ie., ability of the government to repay the existing internal and external debts incurred by an incopetent administration/legislative bodies through appropriate legislative solutions to the existing problems!)
I don't think such bodies have the inclination nor the discipline to do so since they have demonstrated a total lack of that necessity in the immediaate past!
All four bodies of government have presented to the world that they aare concerned only with their immediate greedy concerns and to hell with the economic health of the country!
They all should be impeached and jailed for indeterminate periods of time for their malfeasance in office.

Texas Bill