USD vs DOP?

Samana1 said:

How can the Peso get back to USD 1 = 16 DOP

currently = 1 USD - 26 DOP last summer was it 1 USD 16/17/18 peso

Some body now how this work?

Can somebody help me?

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Direct military intervention by the US

Followed by years of US occupation. Even with that after the US leaves it Peso will crash again

Samana1 said:

How can the Peso get back to USD 1 = 16 DOP

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Is this a serious question? It is theoretically possible, but because of the changes in governance that would be required, it isn't going to happen.

This "Question" by Samana1 shows why there is no public outrage from the Dominican pe

They don't know what the hell is going on with their own Government! "Borrow & Spend" is bad enough,but "Borrow and Spend and Steal"is even worse! Samana1,your government has borrowed billions of dollars in the World Bond Market.They can't pay it back! If you think that 27 to 1 is bad,hang on Pardner,you ain't seen nothing yet!Now that Baninter has "Disappeared" another 2 billion US dollars things can only get worse! Cris Colon

The problem is twofold. Mindless borrowing of staggering dollar amounts and reckless spending on projects that have a poor return on investment. The other is pervasive corruption at nearly all business levels in the D.R which has a destabilizing effect on the entire country. A $2 billion embezzlement loss of deposits by corrupt Baninter executives for a small country like the D.R. is a gigantic financial blow. Criss is right. I don't think we have seen anything yet, unless Hippo is able to get U.S. assistance to bail out the depeciating peso like we did with Brazil and Mexico.

cmedina,if only you were right!

The peso is already at 27! You won't have to wait nearly that long to see 30.It could be 40,50,60 or more by December!Cris

I think cmedina07 means month end...

Coalition of the Coerced

Regarding His Baldness' trip to Washington, here's the question:

Is Hippo's going along with the "coalition of the willing" and EVERY other imperialistic (I can't believe I used that word, but, strangely, it now seems to apply) foreign policy initiative (military, environmental, anti-terrorist, drug, etc.) of Bush worth a $2B bailout (through grants, projects and manipulation of the IMF/World Bank and other "aid" banks) of the Dominican Republic??? The world wants to know.

ATM?

Can you imagine going to a Dominican ATM to get some pesos at this year's end. If you are drawing from a U.S. account the machine will not hold enough Peso bills to dispense for a US$20 transaction. Regards PJT

Re: ATM?

PJT said:

Can you imagine going to a Dominican ATM to get some pesos at this year's end. If you are drawing from a U.S. account the machine will not hold enough Peso bills to dispense for a US$20 transaction. Regards PJT

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Sure it will. When I was in Venezuela a couple of years ago, the rate of exchange was about 600 to 1 and I got all my money from ATMs. If I were there now I would be doing the same even though the rate of exchange is more than 1700 to 1.

What happens as the local currency decreases in value is that bigger denomination bills get printed and the lowest are phased out. For example, at the time I was in Venezuela we had 10,000 bills and I'm sure they now have bills of 20,000 or more.

Sounds like the D.R. may turn into Italy, where spaghetti and wine will cost 60,000 pesos instead of lira. Good Lord.

Hey sonny, can you shine my shoes? Sure mister, that will be 8,000 pesos.

Tragedy with USD

And the tragedy is even USD is doing badly. So imagine if it gets stronger sometime in future.

With peso deposit rates at 24%-28% and still no buyers for the government bonds, meaning they expect depreciation of at least that much in 1 year (almost).

It is really simple, there is Top Line (Revenue, dropping in real terms), Cost Line (Expenses rising) and if you subtract it is Bottom Line, which plainly sucks.

30 for 1usd?

is it true that the peso is now 30 for 1?


and if its true would you guys recommend changing now or waiting til I get there in July? thanks guys .

Keep your $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$4

The peso is "AT RISK"! CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC

What about the Big Mac Index(Burgernomics)

I f one were to believe The Economist's Big Mac Index, the conclusion would be that the peso is one of the many undervalued currencies in the world.

While I tend to go more with my own *Dannon Yougurt Index" which currently goes for $28.95-29.95, a personal index that has never strayed away from the value of the peso/dollar in the street exchange, one should not totally discount the "undervalue" theory presented by the Economist.

The reasoning goes that McDonalds Big Mac burger at $2.71 in the USA is the value standard for the dollar everywhere, since it is a commodity as common as the dollar itself and it is produced with almost the same recipe everywhere. They call it PPP (purchasing-power parity) or for long term purposes, exchange rates swing towards rates that equalize prices of an identical basket of goods and services in any two countries. That is, the dollar should buy the same(burger) everywhere.

If you compare the Big Mac PPP with the actual currency rate is a test of wether a currency is undervalued or overvalued. The Economist admits there are flaws to this theory and those who wish to read about them can come up with many more flaws.

But here is how DR stacks up against the Big Mac PPP:

First you take the price of the Big Mac burger in DR at $54(taxes included-an inequality in some countries) If you covert the price into dollars it would cost you from $1.95 to $2.00 dollars(This is already one of the lowest prices in the world-cheapest being China-$1.20 and most expensive Switzerland $4.52). Then divide the DR price($54) by the U.S. price $2.71 gives you a dollar PPP price of $19.93. Using the April exchange rate of $27 pesos, when you deduct the difference between this rate and the PPP of $19.93 and divided by the April rate of 27 it implies that the peso is undervalued by 26%.

The PPP will give credence to the theory used by Dominican economists who keep insisting that the peso is undervalued and that its real exchange should be about $20 to 1, or close to the DR PPP of $19.93. But then almost all emerging country currencies are undervalued under this system and that it better tracks exchange rates than values. Poor countries will always appear to be undervalued because of the low productivity.

TW

I am a fan of the 'Big Mac' index myself, although for many years now I have not been a fan of its namesake. The variables here though are the running costs for a fast food joint, in the Dominican case very low pay for workers which brings down the price of the item. Also taken into account is the customers' purchasing power I guess. So its not just a clear case of 'in Santo Domingo a Big Mac costs the equivalent of US$2.00 compared to over $4.50 in Zurich'. In Zurich the franchisees are having to pay a higher wage to their workers and are dealing with customers with higher incomes.

Chiri

TW,

I don't know what this guy is talking about. A Big Mac costs $0.99 here in Miami. So using his formula the Peso is overvalued by about 100%!