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Thread: Invest in certificate in dr banks

  1. #1
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    Default Invest in certificate in dr banks

    Hi guys! I would like to know if anyone of you that live in Las Terrenas, invested in Certificate. I know that the problem can be the inflation and the exchange rate in case in the future a person want to transfer back the money in the original currency but in case a person decide to live there and to consider DR as first home, this problem can have less importance.
    Any comment about this matter is very appreciated . Any suggestion in which banking products to invest is welcome and of course in which bank.

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    Better to invest money in USA bank. The inflation here makes it a negative interest thing. One would have to get more than the ever sliding exchange rate difference to keep up.
    I could maybe calculate it if I had to, but when I first arrove here about 4 years ago the exchange rate was about 34 to one, now it is at almost 47. So a dollar left in the USA would now be worth 47 pesos if converted, but if it had been put in the bank here at that point it would be worth a lot less.
    Der Fish

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    If you are a U.S citizen it is a bad investment vehicle all the way around.

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    Quote Originally Posted by Derfish View Post
    I could maybe calculate it if I had to, but when I first arrove here about 4 years ago the exchange rate was about 34 to one, now it is at almost 47. So a dollar left in the USA would now be worth 47 pesos if converted, but if it had been put in the bank here at that point it would be worth a lot less.
    It's a fair point, but your exchange rate figures are wrong. In late April 2012, it was 39-1, and now is (nearly) 46-1, yielding an average devaluation (simplified calculation) of about 4.5% per calendar year.

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    Quote Originally Posted by Virgo View Post
    It's a fair point, but your exchange rate figures are wrong. In late April 2012, it was 39-1, and now is (nearly) 46-1, yielding an average devaluation (simplified calculation) of about 4.5% per calendar year.
    Now subtract that 4.5% from the yield received on a 1 year certificate of deposit with banks in the DR....and the actual real yield is perhaps 1-1.5%.

    Hardly enough of a yield.....when balanced against the risk.


    Respectfully,
    Playacaribe2

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    Quote Originally Posted by Derfish View Post
    ... when I first arrove here about 4 years ago the exchange rate was about 34 to one, now it is at almost 47. So a dollar left in the USA would now be worth 47 pesos if converted, but if it had been put in the bank here at that point it would be worth a lot less.
    Der Fish
    - - - - - - - - - - - - - - - - - - - - - - -

    $1 = 38.90 pesos (April 15, 2012)
    Actual reported exchange from the "Exchange Thread" was 38.90 on 4/15/2012.

    CD value 9% interest 1st year = 42.40 pesos
    CD value 9% interest 2nd year = 46.21 pesos
    CD value 6% interest 3rd year = 49.98 pesos
    CD value 6% interest 4th year = 51.92 pesos (Current Value of the $1 in pesos)

    The interest rate is from BanReservas, Banco Popular had a much higher rate.

    Current exchange rate is 45.80
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    Quote Originally Posted by playacaribe2 View Post
    Now subtract that 4.5% from the yield received on a 1 year certificate of deposit with banks in the DR....and the actual real yield is perhaps 1-1.5%.
    Other things being equal, what would be the yield with a decent traditional US or Canadian bank (excluding online banks and nontraditional arrangements) ?

    If arranged through a Dominican bank, hard currency CD's yield about zero (not even enough to compensate for inflation)

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    Quote Originally Posted by Virgo View Post
    Other things being equal, what would be the yield with a decent traditional US or Canadian bank (excluding online banks and nontraditional arrangements) ?

    If arranged through a Dominican bank, hard currency CD's yield about zero (not even enough to compensate for inflation)

    https://www.popularenlinea.com/perso...nas/Home.aspx#



    Respectfully,
    Playacaribe2

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    Quote Originally Posted by playacaribe2 View Post
    I was referring to the yield of a CD directly with a traditional (reputable) US/Canadian bank. I do not believe that info can be found following that link.

    Based on superficial searching, it seems a 1-year CD with a Citibank-type bank yields very close to zero (0.15 %, NOT fifteen percent!)

    Notice that the 4.5% devaluation is the average over 4 years.

    Over the past 12 months, devaluation is only about 2.5%. CD yield over the same period would be about twice that, depending on terms and conditions.

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  16. #10
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    Quote Originally Posted by Virgo View Post
    I was referring to the yield of a CD directly with a traditional (reputable) US/Canadian bank. I do not believe that info can be found following that link.

    Based on superficial searching, it seems a 1-year CD with a Citibank-type bank yields very close to zero (0.15 %, NOT fifteen percent!)

    Notice that the 4.5% devaluation is the average over 4 years.

    Over the past 12 months, devaluation is only about 2.5%. CD yield over the same period would be about twice that, depending on terms and conditions.
    Click on Inversiones and then look to the right. They are giving savings deposit rates on USD or EURO deposits.

    1 year or four....really inconsequential. Even if you received an effective yield of 2.5% per year over the four years...it is not worth the risk IMHO. If you have no other choice, then 2.5% might look good. But, with rock solid companies paying that and more on their stocks and bonds....the DR is just not worth the risk.


    Respectfully,
    Playacaribe2

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