USD deposit in CD in the Dominican Rep.

you can get 10+ USD in banks and 14+ USD in Finance houses.

Within past few days there was a very long discussion regarding CD interest and safety. It should answer all your general questions. See http://www.dr1.com/forums/showthread.php?s=&threadid=19823&highlight=interest+rates

Ken

Even after reading all of those posts I can't make any sense of it. why aren't major money managers using these CD's, acccounts etc? Theree has to be a serious downside to 12+% dollar accounts, the exposure must be greater than B or even c bonds to provide that kind of return

I'm not arguing, it just doesn't make sense. It is like saying you can buy a new Cadillac DTS for 35K in the DR and have it shipped to the US for a couple grand, saving 25 K in the process.

There is no free lunch

I bet you think that everyone made money in the Stock Market when it was going up also?

What there guys are doing is something that I knew was just a matter of time. They are pooling money form investors to buy a basket of high yielding short term instruments. Thats not a bad idea.

My issue is that what they claim in their website is misleading, especially to those who are not well versed in the finance field. Take for example this quote ....."The Fund will look to invest in US dollar denominated investments only, thus alleviating concerns for currency fluctuation or currency exchange risk."..... that is just flat out wrong, with potentially catastrophic consequences.

Having a USD account will protect you against a slow, gradual devaluation. If there is a sudden and harsh devaluation (as it is feared now) your USD account in the DR could very easily get converted to DR$. If there is a financial crisis, you might not even be allowed to access your own money per decree of the goverment. This has happened recently in other Latin American countries.

Other reasons why the DR has to pay higher interest rates:

1) the rule of law is applied hap-hazardly.
2) the sellers of the short term papers do not have international bond ratings.
3) inflation is back on the rise
4) corruption everywhere (more than even those USA CEOs)

The bottom line: the risks in the DR are numerous and difficult to hedge.

There have been instances in the DR where the government froze funds in dollar accounts because the government was seriously low in foreign reserves. These funds were eventually released, but anyone wanting to withdraw during the period of the freeze would have been unable to do so.

IF I had dollars to invest, I think I would put them into the Banco Popular as CDs. The BPD has NYC and Panamanian banks that work closely with them. Yes, I know that the one in NYC is "independent"of BPD Santo Domingo...yeah right...on paper...the one in Panam? I am not sure about....John Shroder(sic) has not screwed anyone so far, at least that I have heard of...I am always weary of things that are too good to be true...And you should be, too.

I think that SDecatur meant TINSTAAFL...but I understood.

HB