Dominican Interest Rates

if you let the money sit, no doubt you'll have more pesos at the end of 3 years. but with the value of the peso fluctuating, who knows if a 13% return for 36 months will be good or not? you may make or lose a bundle in spite of 13%.

about a year ago the peso was at 33.8 vs the dollar. today, around 35.9 that's about a 6% loss of buying power vs the dollar that would eat into your 13% return.

Also, at the end of the cd's life you must go to the bank and re-invest it or simply take it. It does not get ROLLED over in any way shape or form. OH, and under NO circumstance can you withdraw your money before the end of the cd has been reached.

The Virginian said:

OH, and under NO circumstance can you withdraw your money before the end of the cd has been reached.

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This is actually incorrect information. According to the following BC link, There is a cancellation penalty and you are penalized a point or two depending on when you redeem and the original terms of the CD.

Central Bank of Dominican Republic

Tamborista said:

This is actually incorrect information. According to the following BC link, There is a cancellation penalty and you are penalized a point or two depending on when you redeem and the original terms of the CD.

Central Bank of Dominican Republic

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Tamborista and The Virginian you are both correct! It depends on the type of CD the investor decides to invest in. Banco Central offers TWO type of CDs at the window (VENTANILLA DIRECTA): 'Certificados a Plazo Fijo' and 'Certificados Con Redenci?n Anticipada y Renovaci?n Autom?tica'.

In the case of 'Certificados a Plazo Fijo' (Fixed term CD) the investor is not allowed to redeem the CD under any circumstance prior to the maturity date and the original investment capital does not automatically roll over into a new CD. The terms are fixed (Plazo fijo) for the life of the CD and the initial investment capital should be withdrawn on the date of maturity or shortly after because no interest will be paid by the bank.

'Certificados Con Redenci?n Anticipada y Renovaci?n Autom?tica' is as you point out Tambo. The terms of the investment are more flexible but pays less interest. The investor is allowed to cancel anytime prior to the maturity date of the CD for a penalty. The penalty schedule is part of the investment terms. If the CD is not cashed out on the date of maturity, the original investment amount will roll over into a new CD of equal term, but at the current interest rate the bank is paying.

Banco Central de la Repblica Dominicana

NotLurking

Thanks for the clarification NL!

t'