New goverment bonds and Exchange rate and inflatio

Does anyone have any comments on the exchange rateand inflation in regards to the new Bonds the goverment is issueing?

Re: New goverment bonds and Exchange rate and infl

At the rate of runaway inflation the Dominican Republic is going through(Premium Gasoline from $32 to $44, platanos from .50 to as high as $2.50,a $4 peso increase in sales tax(50% increase)basic phone bill from $50 to $150,Phone VIP plan from $495 to $540, electric bills over 100% increase) if you buy one of the "futurely unredeemable bonds" this government will be issuing, you will be lucky if you have money left for cab fare for the airport to get out of the country!

At 10% rate a year interest inflation will leave you speechless!It is hard to figure out which way you could go broke with Dominican Government bonds, either go broke because inflation will eat you alive, or go broke because the government will not pay you.

Re: New goverment bonds and Exchange rate and infl

This gets long... if you arent interested click out now...

I never had any intention of purchasing DR Bonds... It is just that I have some DR pesos in the country and wondering how best to handle them.. The real question is if inflation will outstrip the exchange rate and the DR interest rate on loans.

I would assume then that with inflation so high, the smartest thing to do would be one or all of the following...

convert pesos to dollars
purchase real property

or for the wild invester
borrow pesos to invest in real property

or for the REALLY wild invester
borrow pesos to convert to US dollars and hope for inflation to beat out the interest rate.

Some numbers that I have found...
Personal DR Peso loans run about 2 to 3% per month (about 27% to 43% per year). A US Dollar account pays about 9% (last I checked). If you were to get a the low end peso loan and the exchange rate changed by 18% (about 1 USD to 20 DR) you would break even.

To get a rough idea of the exchange rate change, I wanted to take a look at inflation and roughly what percentage the DR bond is going to effect the peso supply if The genius in charge decides to print money to cover the loan (as the past would indicate)

Since it is reasonable to assume the Exchange rate will NOT improve in favor of the peso, you would stand a maximum loss of ~20%.

As of right now, the exchange rate has been "stable" for a few years but gas has changed by 38%, plaintains by 500%, phone by 300% ect... this to me would indicate a massive swing in the exchange rate is coming in order to correct the imbalance

Comments and emails welcome...

Re: New goverment bonds and Exchange rate and infl

Help me out...massive swing in which direction?

Re: New goverment bonds and Exchange rate and infl

I would certainly expect the peso to devalue.... the question is how much...

USD dollar rate

Does anyone have the Street converstion rate

from US$ to RD$ (last I heard was 16.65)
from RD$ to US$ ??

thanks