- Thread starter Snuffy
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Manipulation of Exchange Rate...
hugoke01 said:
About expeculation you are correct. The volume of the Spot Currency Exchange System or Forex is actually 1.5 to 1.9 trillion dollars a day. Central Bank intervention is very costly and continuous intervention would totally ruin any economic system.
Riu said:
There is hardly any free flow of peso's outside the DR.. so international peso speculation is not an issue..
MerengueDutchie said:
Though it is local, ther is speculation nonetheless. It is worst because there are only a few major exchange houses that artificially manipulate rates. In a larger context (the "4 majors" currencies trade i.e. Yen, British Pound, Euro and Swissy), the movement needed for a speculator to make a profits is a few cents and a lot of times even less than a cent. Translate this to a smaller, much smaller economy like DR, where X or R exchange house can make the peso move in certain direction, they would benefit from the spread. Although this is confined to a local arena, speculation is there and for the exchange houses purpose of profiting that is all they need, as businesses, producers and even government need to exchange pesos for dollar to trade.
So you see, the peso does not need to be largely traded outside of DR.
porfirio
the problem arises when Leonel wanted to look like an ecomomist hero, he manipultated the dollar ratio from 50 to $1, to 28 to $1. all done to buy cheap dollars. The Banks, and large businesses loved it because now they can buy dollars on sale, and pay their bills. Leonel blessed them and permitted both banks, and super markets to charge the highest prices, and fees with no consideration for the cheaper dollar, which permitted them to operate at the peoples expense. Bad boy Leonel, the only result will be more Dominicans on the boats to PR. and those who can afford a flight will do so. the only difference between Hippollito and Leonel is Hippo is loco and dangerous, Leonel is smarter and dangerous.
the problem arises when Leonel wanted to look like an ecomomist hero, he manipultated the dollar ratio from 50 to $1, to 28 to $1. all done to buy cheap dollars. The Banks, and large businesses loved it because now they can buy dollars on sale, and pay their bills. Leonel blessed them and permitted both banks, and super markets to charge the highest prices, and fees with no consideration for the cheaper dollar, which permitted them to operate at the peoples expense. Bad boy Leonel, the only result will be more Dominicans on the boats to PR. and those who can afford a flight will do so. the only difference between Hippollito and Leonel is Hippo is loco and dangerous, Leonel is smarter and dangerous.
Snuffy said:
Riu said:
Rui,
Thanks, but I never stated that there was no local speculation, in fact if you were to read my posts prior to the one you quoted I insisted that all speculation was local and quite easily done either by govt or exchange houses... still under govt control though; see the installation of currency exchange committees last year, consisting of military going by the exchange houses to 'persuade' the exchange houses to exchange their dollars for govt held pesos.. see my conversation with Mondongo on this issue..
I will however insist that there is hardly any international speculation on the peso, esp since the control over the exchange rate is largely local (govt)..
Cheers,
MD
Porfirio said:
Porfirio,
I don't agree with your motivation behind Leonel's actions... he is just doing what he must for the country to survive.. paying back loans and paying for oil at affordable prices, for which he needs to keep the value of the dollar artificially low... as long as sufficient dollars roll into the country from tourism, exports and other sources he can continue his exchange rate game.. and yes he lets the Dominican people pay their bills.. they voted in the Hippo.. they shall pay his bills too.. I've invariably posted that the Hippo has mortgaged the future of his people.. now you see the effects of this.. the bills come due, the piper needs to be paid...
Oh and nobody forced Hippo to loan money.. not the IMF nor anybody else...he did so out of his own volition to pay for jeepeta's and houses for his croonies.. not even to invest in the future of his people..
Leonel is caught in a difficult situation and will try to do his best.. he also needs to cut public spending and payroll.. but those items are difficulty to tackle with a deadlock in parlaiment.. let's see what happens after the parlementairy elections of next year.. then he can really clean house..
You are correct. The dominican economy is simply too small for its currency to be internationalized and openly traded in the FOREX market. On the local speculation I was simply reafirming your point while asserting that the peso has no market outside its local boundaries.MerengueDutchie said:
MerengueDutchie said:
I agree Dutchie. No matter what the DR leader does people will always complain. Hippo destroyed the economy and Leonel waving a magic wand and making everything allright should not be expected. Cause and effect, for every action there must be a reaction. The alternative? would they rather LF did nothing and let the country sink or implement measure to fix the damage although not in its entirety even at the expense of public distaste for the measures? Thing have certainly improved from a year ago, wouldn't you agree? I doubt Dominicans would rather be back in 2004 under Hippo than 2005 under LF.
porfirio
The value of a nations currency is calculated by International Currency Exchange. In the case of the Dominican Peso, the current ratio of 30 to $1 US has been forced on the Country by Leonel. When Hipo was in office the ratio went as high as 60 pesos to $1 US. Pesos were expensive. Now Leonel has artificially set the ratio in the 28 pesos to $1 US, putting the US dollar on sale. Leonel did this devious manipulation to permit him and his cronies to pay their bills with cheap dollars. Leonel worked out a deal that permitted the banks and business community NOT to pass along the savings they were enjoying. That is why Dominicans work for 4000 or 5000 ($125 to $150 US per month) that is why Banks still charge over 20% interest, but pay you 7% for depositing money in the same banks. That is why Super Markets are 20% to 40% more expensive than Super Markets in Miami or New York. While Leonel is on another of his trips dreaming that he is an international statesman and lunching on Lobster & Steaks, his constituents find it difficult to put food on their tables. Unless Leonel behaves himself, and puts the peso at 40 to $1 US, Zona Franca will disappear. and the poor will get poorer. And Leonel will become richer than he already is, and his cronies will all become multi millionaires. We, the people will continue suffering and hope for another Duarte.
Snuffy said:
The value of a nations currency is calculated by International Currency Exchange. In the case of the Dominican Peso, the current ratio of 30 to $1 US has been forced on the Country by Leonel. When Hipo was in office the ratio went as high as 60 pesos to $1 US. Pesos were expensive. Now Leonel has artificially set the ratio in the 28 pesos to $1 US, putting the US dollar on sale. Leonel did this devious manipulation to permit him and his cronies to pay their bills with cheap dollars. Leonel worked out a deal that permitted the banks and business community NOT to pass along the savings they were enjoying. That is why Dominicans work for 4000 or 5000 ($125 to $150 US per month) that is why Banks still charge over 20% interest, but pay you 7% for depositing money in the same banks. That is why Super Markets are 20% to 40% more expensive than Super Markets in Miami or New York. While Leonel is on another of his trips dreaming that he is an international statesman and lunching on Lobster & Steaks, his constituents find it difficult to put food on their tables. Unless Leonel behaves himself, and puts the peso at 40 to $1 US, Zona Franca will disappear. and the poor will get poorer. And Leonel will become richer than he already is, and his cronies will all become multi millionaires. We, the people will continue suffering and hope for another Duarte.
I read somewhere that the lower exchange rate has saved the Dominican government billions of pesos in loan payments. If this is accurate don't you believe that the long term beneficial effects of this savings could outweigh the short term negative effects?
Porfirio said:
It really depends on which side of the trade you are on.
Yes, a lower exchange rate is better to buy oil pay the utility bills, it costs less in $RD to buy $USD.
If you were smart and bought Pesos in the mid 50's and sold them below 30 then you are as smart than the Funglode boys.
Since food prices have never been readjusted to reflect the stronger RD Peso, then NOBODY but Uncle Leonel and his Cambio Club benefit from a stronger Peso.
Yes, a lower exchange rate is better to buy oil pay the utility bills, it costs less in $RD to buy $USD.
If you were smart and bought Pesos in the mid 50's and sold them below 30 then you are as smart than the Funglode boys.
Since food prices have never been readjusted to reflect the stronger RD Peso, then NOBODY but Uncle Leonel and his Cambio Club benefit from a stronger Peso.
Porfirio the Leonel must share his tricks with the next president so every president has the recipe to "force" an exchange rate for more than a year. Hipolito would've been more than happy if the "force" had been with him.
Here's a little colmado math for you:
Suppose that we buy weekly the 129,000(2004 est.) we consume every day, that would be 903,000 barrels every week:
With an exchange rate of 50*1 and oil prices at US$57(an average) RD$2,573,550,000 would be needed every week to buy oil.
Now, with an exchange rate of 30*1 and oil prices at US$57 we would need RD$1,544,130,000
See? the difference is over one billion RD$ ... sure that's the kind of stuff that's not beneficial to our country even if it affects (in a positive way) almost every dominican ... but maybe what's good for this country is to have some businees exploiting a situation that only benefits them.
Here's a little colmado math for you:
Suppose that we buy weekly the 129,000(2004 est.) we consume every day, that would be 903,000 barrels every week:
With an exchange rate of 50*1 and oil prices at US$57(an average) RD$2,573,550,000 would be needed every week to buy oil.
Now, with an exchange rate of 30*1 and oil prices at US$57 we would need RD$1,544,130,000
See? the difference is over one billion RD$ ... sure that's the kind of stuff that's not beneficial to our country even if it affects (in a positive way) almost every dominican ... but maybe what's good for this country is to have some businees exploiting a situation that only benefits them.
And more colmado math:
Let's give our debt a round number: US$7,000,000,000
At an exchange rate of 50*1 we would need to produce (just to pay that debt) RD$350,000,000,000
At the current exchange rate of 30*1 we would need to produce RD$210,000,000,000
... That's a difference of 140 billion RD$ ... and still that does the country no good, in your eyes that is.
Let's give our debt a round number: US$7,000,000,000
At an exchange rate of 50*1 we would need to produce (just to pay that debt) RD$350,000,000,000
At the current exchange rate of 30*1 we would need to produce RD$210,000,000,000
... That's a difference of 140 billion RD$ ... and still that does the country no good, in your eyes that is.
Project 9,
Exactly.. by the way Leonel is not paying his bills, he is paying the bills he inherited from the Hippo.. let's get this straight once and for all.. so Porfirio save me the demagogic tricks.. if you want to debate on merits you're more than welcome and your arguments do hold enough merit on their own for you not to have to resort to cheap tricks..
Cheers,
MD
Exactly.. by the way Leonel is not paying his bills, he is paying the bills he inherited from the Hippo.. let's get this straight once and for all.. so Porfirio save me the demagogic tricks.. if you want to debate on merits you're more than welcome and your arguments do hold enough merit on their own for you not to have to resort to cheap tricks..
Cheers,
MD
I'm interested in your last statements below. Let's assume Leonel gets what he needs out of the parlimentary elections next year & enough seats are filled with folks from his political party for Leonel to do what he wants/needs to "fix" the country.
What is Leonel likely to do? What are his plans?
What effects will this have on the economy?
What effect will this have on the exchange rate of the peso?
This has been an excellent thread. I really appreciate everyone's insights & opinions.
What is Leonel likely to do? What are his plans?
What effects will this have on the economy?
What effect will this have on the exchange rate of the peso?
This has been an excellent thread. I really appreciate everyone's insights & opinions.
MerengueDutchie said:
Porfirio
Your explanation is long and confusing. simply put, Leonel saw a devious opportunity to inflate the value of the peso, and in turn devaluate the US Dollar. The true value of the peso is 39-40 per each dollar. Leonel corners all dollars at a bargain price (during Hippolitos reign the dollar was as high as 60 to 1$US) ThIS fraud works because Dominicans are paying for this fiasco as the banks now pay minimum interest of 1.5% to 2.0% for US$, and 7%-9% on pesos, where formerly banks paid as high as 12% on $US, and the Central Bank paid as high as 50% for peso CD?s. Prices in super markets never adjusted for the cheap US$ they were now buying, and Dominicans suffer for this joke perpetrated by Leonel, who personally is laughing all the way to the banks (he reputedly owns). Let?s remember Margarita Gomez, who Leonel enriched with over $350,000,000 DR. (THATS MILLION) Let?s remember the Santiago Hospital Leonel gave $25,000,000 US$ (THATS MILLION) to (his friends). Let?s remember Plan Renove, where vehicles supposedly destined for the poor drivers, wound up in the ?nsiders hands?Over $125,000,000 (MILLION AGAIN) was absconded by these same insiders, and Sam Goodson lives a life of a king in Miami. Treason is a punishable offense by execution, and our ?leaders?are commiting treason when they keep the poor in bondage, and fatten themselves on a daily basis.We need the death penalty here to control these ?leaders?who commit treason against the people they swore to protect.
XXXXXXXXFROM PORFIRIOXXXXXXNal0whs said:
Your explanation is long and confusing. simply put, Leonel saw a devious opportunity to inflate the value of the peso, and in turn devaluate the US Dollar. The true value of the peso is 39-40 per each dollar. Leonel corners all dollars at a bargain price (during Hippolitos reign the dollar was as high as 60 to 1$US) ThIS fraud works because Dominicans are paying for this fiasco as the banks now pay minimum interest of 1.5% to 2.0% for US$, and 7%-9% on pesos, where formerly banks paid as high as 12% on $US, and the Central Bank paid as high as 50% for peso CD?s. Prices in super markets never adjusted for the cheap US$ they were now buying, and Dominicans suffer for this joke perpetrated by Leonel, who personally is laughing all the way to the banks (he reputedly owns). Let?s remember Margarita Gomez, who Leonel enriched with over $350,000,000 DR. (THATS MILLION) Let?s remember the Santiago Hospital Leonel gave $25,000,000 US$ (THATS MILLION) to (his friends). Let?s remember Plan Renove, where vehicles supposedly destined for the poor drivers, wound up in the ?nsiders hands?Over $125,000,000 (MILLION AGAIN) was absconded by these same insiders, and Sam Goodson lives a life of a king in Miami. Treason is a punishable offense by execution, and our ?leaders?are commiting treason when they keep the poor in bondage, and fatten themselves on a daily basis.We need the death penalty here to control these ?leaders?who commit treason against the people they swore to protect.
I guesss you just ignore the Laws of Economics the rest of the world runs on. Sure the banks were paying 50% when the inflation rate was 80%. Your net at the end of the year was a loss of 30%. I would much rather earn 7-9% with an inflation rate of 4%, a 3-5% net gain.Porfirio said:
editor
Only Cuba, China and the DR go against the international monetary currancy formula of setting a value on their currancy. This is proven when a visitor from the three Countries identified above (Cuba, China, DR) arrive in Europe, Canada or United States and attempt to convert their countries currency to Euros, Canadien $, or US $. They will not accept the currency from the three mentioned above. So, prior to departing from any of these three Countries, China, Cuba or DR, you must convert to a currency recognized with international stability such as the US $, Euros Canadian Dollar etc: The consequence of this unorthodox practice is the currencies of China, Cuba, DR, is that the value or acceptance is only applicable within their own countries, like play money. The question arises when we wonder what does each of the three violating societies do with the US $, Euros, Canadien dollars that are amassed in the billions. Answer: The leaders of Cuba, China and DR are becoming the worlds next billionaires. While the Citizens of China, Cuba and DR are prisoners in a perpetuating cycle of econimic imprisonment. Leaders of the DR are literally salavating (drooling) at the $350,000,000 (million)US International Monetary Money destined to arrive here. What in the world will these devious leaders do with this windfall of US dollars ?? Remember, this is another LOAN piled on top of past loans provided by the IMF, Paris Club & OAS, the DR is drowning in. No ?watchdog?here in the DR to oversee where the $350,000,000 (million) winds up, so we must assume another ?Plan Renove?will appear, or Margarita Gomez will ?decorate?another Government Building. In a country such as the DR, where Police steal hundreds of cars, passports are sold like bananas, banks (Baninter, Bancredito) fail, and the Owners such as Baez Figueroa and Arturo Pellerano live lives of Kings with no punishment, in vain we await justice. Dominicans contended with abuse & injustice perpetrated on them by Tyrants and Thieves for generations. And still they come in a never ending parade of sinning deviates. Pepe Gloico and Sam Goodson are two who were permitted to escape because they would reveal accomplises leading up to the Presidencys. Paulino Corrino will stand trial under the US Federal Court System in November, and insiders feel that as many as 50 will be sentenced to long prison terms. Paulino continues to name high ups within the DR Government, right up to past and present very famous people. One final question for my friends participating in this discussion -- President Chavez (Venezuela) sells oil to Cuba & DR for $26 US per barrel, while the market price is above $60 US, where gasoline sells for less than $3.00 US. Why is gasoline sold here in the DR still above $3.00 ?
Only Cuba, China and the DR go against the international monetary currancy formula of setting a value on their currancy. This is proven when a visitor from the three Countries identified above (Cuba, China, DR) arrive in Europe, Canada or United States and attempt to convert their countries currency to Euros, Canadien $, or US $. They will not accept the currency from the three mentioned above. So, prior to departing from any of these three Countries, China, Cuba or DR, you must convert to a currency recognized with international stability such as the US $, Euros Canadian Dollar etc: The consequence of this unorthodox practice is the currencies of China, Cuba, DR, is that the value or acceptance is only applicable within their own countries, like play money. The question arises when we wonder what does each of the three violating societies do with the US $, Euros, Canadien dollars that are amassed in the billions. Answer: The leaders of Cuba, China and DR are becoming the worlds next billionaires. While the Citizens of China, Cuba and DR are prisoners in a perpetuating cycle of econimic imprisonment. Leaders of the DR are literally salavating (drooling) at the $350,000,000 (million)US International Monetary Money destined to arrive here. What in the world will these devious leaders do with this windfall of US dollars ?? Remember, this is another LOAN piled on top of past loans provided by the IMF, Paris Club & OAS, the DR is drowning in. No ?watchdog?here in the DR to oversee where the $350,000,000 (million) winds up, so we must assume another ?Plan Renove?will appear, or Margarita Gomez will ?decorate?another Government Building. In a country such as the DR, where Police steal hundreds of cars, passports are sold like bananas, banks (Baninter, Bancredito) fail, and the Owners such as Baez Figueroa and Arturo Pellerano live lives of Kings with no punishment, in vain we await justice. Dominicans contended with abuse & injustice perpetrated on them by Tyrants and Thieves for generations. And still they come in a never ending parade of sinning deviates. Pepe Gloico and Sam Goodson are two who were permitted to escape because they would reveal accomplises leading up to the Presidencys. Paulino Corrino will stand trial under the US Federal Court System in November, and insiders feel that as many as 50 will be sentenced to long prison terms. Paulino continues to name high ups within the DR Government, right up to past and present very famous people. One final question for my friends participating in this discussion -- President Chavez (Venezuela) sells oil to Cuba & DR for $26 US per barrel, while the market price is above $60 US, where gasoline sells for less than $3.00 US. Why is gasoline sold here in the DR still above $3.00 ?
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Porfirio said:
I can only assume ignorance when trying to understand how a person is making such a relation between countries with widely different exchange rate regimes. What i can't understand at all is how someone is talking about "setting" an exchange rate in a country with a managed floating exchange rate.
Can you please tell me when was the last time the Central Bank set an exchange rate?
Porfirio said:
You can't convert RD$ in any other country simply because there's no RD$ market and no one is interested in acquiring RD$ ... supply and demmand theory, Ec101. The reasons why there's no international market for RD$ go far beyond the exchange rate regime of this country.
Porfirio said:
How much oil is bought at that price?
BTW: the same happens with the mayority of countries outside the G8.
... i won't answer to the rest of your political ramblings since they're just that: ramblings.
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