Investing Pesos in a CD...MONEY TALK

torreylee

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I have a question for those who invest at Dominican banks or have extensive knowledge of the subject.

I previously read this at Dominican Republic Banks Banking | Investments | Offshore Business | Retirement Accounts | News Articles and Information | Legal Services

"Should it be appropriate for you, investing in time deposits denominated in the local currency, the Dominican Peso, could offer yields up to 20% for a bank CD"

Is this true? And if so, maybe I am still misunderstanding...

So to be clear, when I move to DR, I can take say, $5,000 US and convert it into Pesos, invest that in a bank CD and yield the equivalent of $1000 U.S. (%20) in Pesos yearly?

Is that right? That seems to good to be true! :surprised

OH! And also, do any of these banks also offer DAILY compounding interest on these investments?
 
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Tamborista

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Apr 4, 2005
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Is that right? That seems to good to be true! :surprised

At one point, you could have gotten paid a lot more than 20% during the Hipo regime. A two year Central Bank CD currently pays 9%. (Keep in mind you have potential currency fluctuation risk in RD pesos, which could eat up some/all of your principle.)

John Schroder really needs to update his website every ten years or so!
 
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torreylee

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At one point, you could have gotten paid a lot more than 20% during the Hipo regime. A two year Central Bank CD currently pays 9%. (Keep in mind you have potential currency fluctuation risk in RD pesos, which could eat up some/all of your principle.)

John Schroder really needs to update his website every ten years or so!

Oh, I understand now. I didn't realize how old that was, lol. That 9% CD, is that in U.S. Currency? And what about 90 day CD's in U.S. Currency? Do you all invest a bit?
 

Expat13

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Jun 7, 2008
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At one point, you could have gotten paid a lot more than 20% during the Hipo regime. A two year Central Bank CD currently pays 9%. (Keep in mind you have potential currency fluctuation risk in RD pesos, which could eat up some/all of your principle.)

John Schroder really needs to update his website every ten years or so!

Other than currency volatility-other factors to be weary of in 3rd world countries, is high inflation, sometimes unstable financial institutions with internal theft, government corruption. These are some of the factors that help leading ratings firms like Fitch, Sand P, Moodys etc. to determine a Countries investment grade risk. Only few in Latin America have achieved this distinction and the DR is far from one of them.
 

Tamborista

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Are good rates being offered for U.S. Dollars in savings or money market accounts?

You should be able to find 1% in a bank.;)
As Windeguy suggested, you can find higher rates, but there is risk involved.
 
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ExtremeR

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Mar 22, 2006
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DOP has been really stable against the Dollar since Valdez Albizu took over the Central Bank. I would take the risks with smaller amounts at first (changing $US to DOP I mean) whenever they start accepting CD.
 

M0823MIKE

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Was just doing my own research on best cd rates in the DR. The best I have found so far is like 7.1% annual at Banco Caribe in pesos of course. Have been here for about 7 years now and for the past 4 years or so, post hipolito, the peso has been relatively stable. I got in the banco central program when it was paying abot 17% up until the end last september. Have cd's at scotia bank (bank of nova scotia) currently at about 3.5% in pesos for 1 million pesos and over so I am thinking banco caribe would about 2x that. Wanted to know if anyone was familiar with this bank or had any other advice or reccomendations.

THANXXXX....
 

Lambada

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Wanted to know if anyone was familiar with this bank

Yes I am familiar with them - I use them for sending cash to other parts of the DR. That part works very efficiently. Have never used them to purchase CDs. The question to ponder is, if their rates are way higher than other banks for the same product, why?
 

Syork

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Dollar CD?s

Ban Reservas is offering 3.8% on dollar cd?s of $10,000 and above for 18 months...best I have seen but down from 4.00% a few months ago.

Rick
 

TOTENHAM

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Take a look at Vanguards High Yeild Bond Fund
or There REIT'S Fund For income
Of course the higher the potential return the higher the risk
Len
 

M0823MIKE

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banco caribe paying about 7.5%(pesos) and scotiabank 3.5%- both for 36month- lesser terms available
 

wayne

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I know this thread is a bit old but just thought I would share some recent information. Scotia bank is paying 6.5% for investments 5,000,000 pesos and over for a term of 24 months.
 

Tamborista

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I know this thread is a bit old but just thought I would share some recent information. Scotia bank is paying 6.5% for investments 5,000,000 pesos and over for a term of 24 months.

So your best case scenario is break even after inflation and Peso devaluation.

I prefer a EURUSD position at the moment.
 

wayne

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Dec 25, 2003
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So your best case scenario is break even after inflation and Peso devaluation.

I prefer a EURUSD position at the moment.

Depends if you are cashing to US or Euro. If you are living in the DR doesn't make much difference. Fluctuation in currency happens in all countries.
 

Tamborista

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Depends if you are cashing to US or Euro. If you are living in the DR doesn't make much difference. Fluctuation in currency happens in all countries.

I guess purchasing power from your base currency does not matter much?