Lack of foreign currency at banks- no dollars to purchase

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Fernandez

Bronze
Jan 4, 2002
572
38
48
A worrisome development. A company owing us has been regularly paying off their debts, accessing the international market selling pesos to purchase the dollars needed. The news this week is that there is a severe shortage of US dollars in the market and banks/financial institutions have no currency available to sell to meet the demand for dollars. This feeds upon itself as those holding fx will continue to do so propping up the exchange rate vs. the Peso, and force purchasers to pay up in Pesos for access to currency...
While perhaps temporary, this disruption in the convertibility of the currency should serve as an alert to what could happen in a more serious constraint, with the peso rate devaluing as a result- something which is probably behind this situation. Last time I left the DR (December 17th, 2012) the USD / PESO was trading around 39/US....I notice today that it sits at 41/US more or less, and with no trading over the weekend it might devalue a bit more. This 7% negative move in the PESO might be what is needed for some segments to move forward, but investors in PESO instruments beware.
Heads up.
 
cobraboy

cobraboy

Pro-Bono Demolition Hobbyist
Jul 24, 2004
40,964
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The rapid rise of the US-peso exchange rate is not a good thing for the Dominican people. Not at all. It's good for those with dollars.
 
W

william webster

Platinum
Jan 16, 2009
30,247
4,330
113
And that may be why the US $$$ are scarce..... people are hoarding them - waiting for the rate to jump up.

I am almost one of those..... never had a US $$ account here until this month..... now I can sit on my Greenbacks:classic:
 
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playacaribe2

Gold
Jan 9, 2004
10,912
2,247
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william webster said:
And that may be why the US $$$ are scarce..... people are hoarding them - waiting for the rate to jump up.

I am almost one of those..... never had a US $$ account here until this month..... now I can sit on my Greenbacks:classic:
Click to expand...

Dollars are scarce because the government is soaking them all up as soon they get into the banking system. Their international currency reserves are at less than 3 months supply. A minimum supply is 6 months worth of reserves to meet international payments.

And yes people see what is starting to happen vis a vis the Dollar/Peso and they too start to hoard their Dollars. In addition, still others start to convert to Dollars as they too see a quickening decline in the pesos value...such that the exchange rate depreciation becomes an almost self fulfilling prophecy.

Expect this to continue until the IMF comes back and announces a new "loan" for the DR. Short term that will take some pressure off the peso.

You may well be able to sit on your greenbacks....but withdrawing them may be a whole different matter. I suspect that the current situation is nothing like the banking collapse fiasco, but currently there certainly is a mini crisis of confidence in the peso.


Respectfully,
Playacaribe2
 
W

william webster

Platinum
Jan 16, 2009
30,247
4,330
113
I suppose I can always swap them 'inside ' the banco - from US account to DRP account w/o actually touching any hard currency.

Rate may be a bit short, but you can't beat the convenience
 
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playacaribe2

Gold
Jan 9, 2004
10,912
2,247
113
william webster said:
I suppose I can always swap them 'inside ' the banco - from US account to DRP account w/o actually touching any hard currency.

Rate may be a bit short, but you can't beat the convenience
Click to expand...

True. And as long as you do not have your entire life savings in Dollars in a DR bank, that method will suffice. For those expats that live there, that appears to be an acceptable/workable solution.


Respectfully,
Playacaribe2
 
AlterEgo

AlterEgo

Administrator
Staff member
Jan 9, 2009
23,152
6,321
113
South Coast
Our last trip we had trouble withdrawing dollars from our dollars account at BHD. With one exception [at the La Sirena branch in San Cristobal], none of the branches in SD had any dollars to give us, we had to take the exchange in pesos. In all fairness, we didn't go to the main office on 27 de Feb.
 
C

Criss Colon

Platinum
Jan 2, 2002
21,843
191
0
38
yahoomail.com
That's a BHD scam.
You always "MUST" go to the main branch to get dollars.
A friend once sent me a dollar transfer, no luck, except Main Bank.
I send ZOOM money transfers in Dollars, they send you to the main office, UNLESS, you agree to take pesos, at THEIR rate.
"F" them!
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