Holy shizznit...dollar droping like a rock

suarezn

Gold
Feb 3, 2002
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55
I just checked Envios Boya which I use to send money to The DR. They normally have the most up to date rate that I've seen so far. They are currently paying 31.50 per dollar down from 35 yesterday. Their posted rate is normally exactly one peso less than you'd get on the street. Is this true? Are they buying it at around 32.5 this afternoon? This absolutely sucks, for me, since I have to convert a bunch of USD's to Pesos and since prices for goods remain the same (they will actually go higher now with the new tax rates). I want Hippo back!!! So I can sell my dollars at 55:1...
 

Gringo

Bronze
Jan 1, 2002
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Its Unreal?

I called Rusa today in Puerta Plata at 1:00, 34.00, I called back at 4:30, 32.00..........W T F is going on?

I think the new President is keeping it low so he can buy all he can on credit and then let the Sh** hit the fan, skyrocketing the Peso again...to 50.00

Any Ideas?

Gringo
 

Lechero

New member
Aug 11, 2004
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Fx

It is obvious there is some kind of intervention to get the Peso down.
My theory is The Administration wants it as low as possible to purchase $USD at a more favorable exchange rate in anticipation of payment of the long overdue electric bills. There has been no major demand for $USD on the Governmental level since our bald headed friend left office in August.
 

Ricardo900

Silver
Jul 12, 2004
3,269
37
48
I was gettin used to dividing everything by 50!!
Are the prices of goods changed to reflect the new rate or do I have to walk around with dam calculator :cry:
 

mk-ultra

New member
Sep 13, 2004
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i'm not an economist, but isn't a stronger peso against the dollar better for the dominicans and their economy?
 

suarezn

Gold
Feb 3, 2002
5,823
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55
mk-ultra said:
i'm not an economist, but isn't a stronger peso against the dollar better for the dominicans and their economy?

Yes, in theory...the issue is that once prices go up they don't come down as they should. So now everyone suffers, even those people whose main income are remittances from relatives abroad, who were doing good before.

Like I said before, where is Hippo when you need him?
 

Ricardo900

Silver
Jul 12, 2004
3,269
37
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Yes, But

mk-ultra said:
i'm not an economist, but isn't a stronger peso against the dollar better for the dominicans and their economy?
If you have wealthy dominicans and Gov't officials "timing the market" they could load up on Green Backs at 32 and later sell them at 50, so if you exchange for a cool million you can make a profit of 18 million pesos or 360,000 smack-a-roos.

ps. I never met a third world government that didn't help the rich and screw the poor
 

santodocam

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Feb 11, 2004
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mk-ultra said:
i'm not an economist, but isn't a stronger peso against the dollar better for the dominicans and their economy?

It would be good if it was permanent, for Dominicans earning pesos, especially those who need to buy dollars.

As this board is comprised of mostly foreigners, for whom this is not good, we are all complaining.

Also, prices are not reflecting the value increase. Add to this the fact that many foreign businessmen, like myself, are considering other countries like Costa Rica to conduct our business as a result of the devaluation of the dollar. My company pays Dominicans 12 times the minimum wage, as do most of the other companies in my business. Less high paying jobs in the country, less foreigners vacationing here, foreigners here spending less, etc. can not possibly be a good thing for this country.
 

mondongo

Bronze
Jan 1, 2002
1,533
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38
The exchange rate has correlated well (this year) with the interest rate paid by Central Bank certificates. These interest rates have fallen from near 60% toward the end of Mejia to about 33.5% today.

What Fernandez has also done is stop issuing new, unbacked Central Bank certificates. Mejia was issuing, on a weekly basis, nearly DR$10 Billion. Fernadez has cut that back significantly. Just today's weekly auction was a mere pittance: DR$0.5Billion. This put a stop (temporarily?) to one of the largest sources of DR$ money supply growth. This in turn, bring the rate back down.

*******

I perused the half year report on the Central Bank website. There were many interesting tidbits....but suffice it to say that Fernandez and the IMF accomplished their goal in arresting the fall of the DR$. The Dominican economy is becoming increasingly indenpendent of the Dominincans in the Dominican Republic. The DR governement revenue is becoming more dependent on those parts of the economies that generate US$ directly. In other words, it is becoming less and less necessary to use DR$....at least as far as the central government is concerned.
 

Lechero

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Aug 11, 2004
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Did the Peso Split like a stock?

Ho Hum........RD29 Pesos/ $USD!Anyone know why? I guess we will find out eventually what really caused this. Maybe it split!
 
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DogsRule

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Apr 14, 2004
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It takes time

suarezn said:
Yes, in theory...the issue is that once prices go up they don't come down as they should. So now everyone suffers, even those people whose main income are remittances from relatives abroad, who were doing good before.

Like I said before, where is Hippo when you need him?

It appears that the dollar has dropped so rapidly that perhaps the prices haven't had a chance to be changed. After all, prices usually change once a week or so, I'd suspect, whereas the rate appears to be changing hourly.
 

Lechero

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Aug 11, 2004
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This transition to The "New Fernandez Economy" occured way too fast.
Unless you had the heads up call to get out of dollars you got burnt.
I guess the RDBBC made a killing on this..........no surprise.
 

Danny W

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Mar 1, 2003
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I can't see prices dropping much. Why would anyone lower them unless they absolutely had to? On the other hand, it seems like the peso/dollar has to reach a happy mediun soon. If it is dollar speculation by insiders, they've scored by now and will want to go in the other direction to cash in. In the general economy the dollar weakening so rapidly is not good for anyone. - D
 

mk-ultra

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Sep 13, 2004
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again, i'm no econimist and infact this is a foreign subject for me, but i know as the peso was getting weaker and made it to around 50:1, the prices went up and the wages remained the same, which put a real hurting on the average dominican earning pesos. was good for the foreigners and tourists with their dollars, but bad for the dominicans. so it seems to me as the peso gets stronger again, prices will eventually go down somewhat and dominicans will be better off.

i know many on this board are foreigners, which is why they prefer hippo and a weaker peso. but isn't that a bit selfish? capitalistic to say the least? not thinking of the greater good for the dominican people? i mean after all, it is the dominican republic, not the american republic.

peace
 

Lechero

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Aug 11, 2004
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Selfish

The author of this thread, Suarezn, does not seem to be very educated on the basics of foreign exchange or care very much about the general welfare of The Dominican people. He/She seems very self centered about how many Pesos He/She gets for HIS DOLLAR and not much else.
 

Snuffy

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May 3, 2002
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My ideas on this subject...

I am all for the dollar deflating as long as prices deflate also. But if prices do not go down then those Dominicans hurt even more. And I have not seen prices go down. Of course if prices go down then we all benefit. I can handle the sudden devaluation of the dollar with prices remaining the same. But Dominicans receiving money from abroad...this makes their lives even worse. Perhaps prices will start coming down soon. Someone said that Leonel is going to step in and start controlling prices forcing prices down. If that happens then that is great.

If it does not then you can only assume that the wealthy are determined to keep prices high in order to make more money. They can make all kinds of excuses...gasoline is high, hurricanes, bought product when dollar was more expensive, new itbis...

I believe prices may come down a little but not inline with a falling dollar. I believe that there has been a surge in the population of dominicans returning from USA and other countries. This surge has caused the demand side to increase and that allows the supply side to price higher. Store owners know that these people will buy their products as they try to maintain their standard of living abroad. These people makeup a new economy here and the focus has shifted in the direction of that new economy and away from that end of the spectrum that cannot afford these higher prices. For those that cannot afford, they will have to find a way to survive...change their habits. I feel like I am in between. I can afford this more expensive economy but I have to watch my money in order to afford it. I felt better when the dollar was 17 to 1. I believe I had more buying power.
 

suarezn

Gold
Feb 3, 2002
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Lechero said:
The author of this thread, Suarezn, does not seem to be very educated on the basics of foreign exchange or care very much about the general welfare of The Dominican people. He/She seems very self centered about how many Pesos He/She gets for HIS DOLLAR and not much else.

Dude don't even start with the personal attacks. You DON"T KNOW ME! You're pretty new around here. Why don't you go back and read some of my hundreds of posts that I've made over the last five plus years in this board and get educated on what I stand for, before you start talking about me.

Let me ask you this. How many people in your family depend on the remittances you send them? How many USD's do you spend on a monthly basis in the Dominican economy? Have you seen prices for anything drop?

Mk-Ultra: You said that "as the peso was getting weaker and made it to around 50:1, the prices went up and the wages remained the same, which put a real hurting on the average dominican earning pesos". You're absolutely right about that. People who were getting USD's were doing fine, probably even better than before.

Now the USD goes down, but prices stay the same, which means that those people you mentioned are still hurting and the people who get USD's are also going to hurt just as much.

I don't know when governments in The DR are going to understand that volatility in either direction kills the economy. It doesn't matter at what level the dollar is bought as long as there's long term stability.

Right now the economy is almost paralized, as people wait and see how low it will go and are putting off any major purchases in expectation that the prices will go down any day now.

BTW nobody in this board or anywhere else prefers Hippo. You guys couldn't get a joke if it hit you in the face...jeezz
 

Barnabe

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Dec 20, 2002
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suarezn said:
Now the USD goes down, but prices stay the same, which means that those people you mentioned are still hurting and the people who get USD's are also going to hurt just as much.

I don't know when governments in The DR are going to understand that volatility in either direction kills the economy. It doesn't matter at what level the dollar is bought as long as there's long term stability.

Right now the economy is almost paralized, as people wait and see how low it will go and are putting off any major purchases in expectation that the prices will go down any day now.

In my business prices (I import in the DR) have started to go down. In the next month or so they will drop by a 15 to 20% more I think.

But there is a normal time lag because imported items on the shelves have been paid with a peso at 45 if not 50.

Now think of importers that ordered stuff in countries such as China where in some cases you get your container in Rio Haina three months after ordering.. These people will take some time to adapt to the new rates...

And what about exporters in free zones that have manufacturing contracts in USD? I suppose they will be crying soon.. So will the tourism industry, which I am sure has been making HUGE profits with the dollar going up against the peso.

And what about the government budget, with incomes from import taxes going down with the dollar falling?...

What I wonder if what will happen with the property prices? All these people on the North Coast that were selling in USD, will they switch to peso, stay on USD, increase USD prices?.. In Santo Domingo, apart from Naco/Piantini/BellaVista, what will happen to the peso prices?

What about cement, blocks and varilla prices..? If they follow the peso against dollar (I bet they will) it should boost the economy?

I am happy.

Barnab?