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Thread: Justification for Not Supporting the Dollar

  1. #1
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    Default Justification for Not Supporting the Dollar

    Those of us who earn (or, in the case of millions of Dominicans with family overseas, in essense, receive) dollars and euros and spend pesos are feeling the pain right now. So, I presume, are Dominican export businesses (the few left) as the cost of labor and other local inputs is going up dramatically in dollar terms.

    The peso is up 30% in value since what at the time seemed like a reasonably stabalized rate of 42:1. Our consumption is, out of necessity, down.

    I understand the fiscal reasons to stabalize the peso. I could even accept 37:1 as beneficial for foreign debt purposes. But 29:1 is ridiculous, and who knows if it will stop.

    So my question is: Is the collapse of the dollar good for anyone in the DR? Should the Central Bank step in and buy dollars? Is the DR government taking advantage of the low rates to pay back foreign debt? If not, then who, if anyone, is benefiting from this?

    Mondongo, Dutchie and other professional and amatuer economists encouraged to reply. Conspiracy theorists welcome, as always.

  2. #2
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    Default amatuer only

    Quote Originally Posted by Porfio_Rubirosa
    Those of us who earn (or, in the case of millions of Dominicans with family overseas, in essense, receive) dollars and euros and spend pesos are feeling the pain right now. So, I presume, are Dominican export businesses (the few left) as the cost of labor and other local inputs is going up dramatically in dollar terms.

    The peso is up 30% in value since what at the time seemed like a reasonably stabalized rate of 42:1. Our consumption is, out of necessity, down.

    I understand the fiscal reasons to stabalize the peso. I could even accept 37:1 as beneficial for foreign debt purposes. But 29:1 is ridiculous, and who knows if it will stop.

    So my question is: Is the collapse of the dollar good for anyone in the DR? Should the Central Bank step in and buy dollars? Is the DR government taking advantage of the low rates to pay back foreign debt? If not, then who, if anyone, is benefiting from this?
    I think the gov is getting ready to pay off foreign debt myself, unless the regular prices start coming down also. The idea that they have to clear the shelves of the stuff that was bought at the other rates is normally bull. Because if this is correct the gasoline prices will go through the roof in about 3 months, at US50 pb. Normally there is too much flex in the price of gas for this to be true.

    get ready for a dollar buy to pay off debt, then watch the taza go back up

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