The Dominican Peso will be 1:1 with the US Dollar Again?

[playacaribe2]

Ah yes, the days of 50% CD's. Some lucky folks got in on that one. (ahem)

Ahh yes......................Banco Intercontinental. The bank that broke the bank............and the country.

"Solid............like Sammy Sosa."

Official peso rate soared to 59.................unofficially it hit over 60................until Mejia stationed the military at Casa de Cambio's to make sure they adhered to the official rate.......................our own departed CCCCCCccccccccc reported getting 60.

IMF saved the DR............who in turn saved the depositors...............80% of the deposits were rumored to be held held by wealthy families.

Not the only example, but the best example of what still haunts the DR today.......................massive corruption...............that from time to time manifests itself beyond the usual graft that still exists here today...............Odebrecht anyone.


Respectfully,
Playacaribe2

 

[Tamborista]

What a great slogan!

 

[windeguy]

Will the Peso ever go back to Parity with the Dollar now that Import is increasing and national reserves are increasing?

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No. It won't.

 

[SKY]

There is a better chance of riding a Moto Concho to the Moon...................

 

[NALs]

No

1:1 was started under Trujillo due to a government policy expressing the Dominican excellence (in fact, the Dominican Peso was slightly above the US Dollar) and remained for some time after the dictatorship, then it ended forever.

It should be noted that before the current Dominican Peso was created by Trujillo in the 1940's, the legal currency was the US Dollar. After Trujillo paid off the national debt, he created the Dominican Peso along with other things such as the Central Bank and BanReservas. The DR has been one of the few countries in the world to pay its foreign debt. Oh well, DR is back to being mediocre again owning money to everybody (a debt that will never be paid back, mind you).

 

[JD Jones]

Yeah, and many folks lost everything

The real surprise was when LF won and the rate dropped from 55 to 32 (IIRC) so the value of my CD's literally almost doubled overnight

 

[cavok]

Ah yes, the days of 50% CD's. Some lucky folks got in on that one. (ahem)

I missed that, but I did get a CD from Banco Central that paid 18% for three years. That was pretty nice.

 

[william webster]

It's taxable !!
that 18%

 

[JD Jones]

I missed that, but I did get a CD from Banco Central that paid 18% for three years. That was pretty nice.

I got a 28% after the 50%, and an 18% after the 28%.

By the time the 18 finished, the sale of CD's was in the hands of banks, and I was unwilling to go that route.

 

[cavok]

It's taxable !!
that 18%

I never paid any taxes on it here, but i did have to report it to the IRS.

 

[CristoRey]

There is a better chance of riding a Moto Concho to the Moon...................

I wouldn't bet against it.
What they are doing is not sustainable and if history is any judge at some point in the future there will be a major correction and devaluation. It may never trade lower than the peso but it could end up coming pretty darn close.

 

[playacaribe2]

The real surprise was when LF won and the rate dropped from 55 to 32 (IIRC) so the value of my CD's literally almost doubled overnight

A truly rare occurrence...........not due to LF but due to the IMF rescuing the peso as it headed for hyperinflation.

The DR righting its financial ship, with IMF help, is a success story in Latin America.................very much unlike Argentina, Brazil and Venezuela.

100:1 peso/dollar will arrive long before any parity of 1:1..............


Respectfully,
Playacaribe2

 

[CristoRey]

A truly rare occurrence...........not due to LF but due to the IMF rescuing the peso as it headed for hyperinflation.

The DR righting its financial ship, with IMF help, is a success story in Latin America.................very much unlike Argentina, Brazil and Venezuela.

100:1 peso/dollar will arrive long before any parity of 1:1..............


Respectfully,
Playacaribe2

Indeed it may but I'm talking long term the next 10 to 15 years.

 

[playacaribe2]

Indeed it may but I'm talking long term the next 10 to 15 years.

If past history is any guide, that is about the right time frame (10-15 years) for the peso to reach 100:1...............barring another black swan event like Baninter etc.

Respectfully,
Playacaribe2

 

[CristoRey]

If past history is any guide, that is about the right time frame (10-15 years) for the peso to reach 100:1...............barring another black swan event like Baninter etc.

Respectfully,
Playacaribe2

I hope you are correct.

 

[thompstr]

Think there will be a ression soon, so I think it'll drop more

 

[cavok]

If the peso drops too much, tourism will suffer. The government won't let that happen.

 

[playacaribe2]

Think there will be a ression soon, so I think it'll drop more

Any recession, when/if it comes will be induced by the fed raising interest rates. Expect a 50bps rise in the fed funds rate next month and another 50bps in June...........with more on the way.

To the DR's credit, they see the handwriting on the US wall and have increased their monetary rate several times already the last being April 1st. This is an attempt to cushion the peso, as it will likely start to fall (devalue) against the dollar later this year.

As the fed tightens rates, credit becomes harder to get and causes increases in all that floating rate bond debt that the DR and other countries have accumulated.............i.e., it takes more dollars to service the same debt.

As the DR tightens interest rates, credit also gets more expensive there..............the ultimate goal being to slow inflation and the eventual slowing of the destruction of the purchasing power of the peso.


Respectfully,
Playacaribe2

 

[playacaribe2]

If the peso drops too much, tourism will suffer. The government won't let that happen.

If the peso falls hard............tourism will actually tend to increase..................


Respectfully,
Playacaribe2

 

[Joseph NY2STI]

If the peso falls hard............tourism will actually tend to increase..................


Respectfully,
Playacaribe2

As a friend recently reminded me - Good for tourists, not so good for Dominicans.