Invest in certificate in dr banks

[playacaribe2]

Yeah, the DR is *NOT* the ONE country in the world where bank failures are impossible.

True. But the thread is specifically about DR banks....and my reply was based on his statement any reply will be very welcome.

OTOH, why should have a REASONABLE person trusted the people behind the Peravia Bank with her/his money? What was their track record?

Choosing a bank is no different from choosing anything else that may have a big impact on your life. You MUST do YOUR homework.

Give a list of people who have lost money because of a Banco Popular failure? I'd bet it's a very short list ( I think it has ZERO members).

The Vicini family is behind Banco del Progreso, and they once lost money because a corrupt officer cheated the bank, but the depositors lost NOTHING.

Find out who is behind Banco BHD-Leon. And so on.

It is the SPECIFIC BANK that matters.

Yes, and Peravia, Baninter and Mercantil are just a sample of those that have failed......

Most people do not have the time nor resources to investigate each and every bank.....


Respectfully,
Playacaribe2

 

[Virgo]

Free market?

The government sets the exchange rate range, usually every 4-5 days.....not the market.

Show me a source. I think you are confusing the Central Bank lending rate (to banks) with the foreign exchange rate.

 

[rfp]

Yeah, the DR is *NOT* the ONE country in the world where bank failures are impossible.

Yes, but where do you bank ? Dont defend where you would never put more than day to day spending money.

As per the CD's I dont see the peso weakening much more as the US economy starts to sputter a little bit, a one year term at 7 % in pesos isnt horrible but you could do better elsewhere.

 

[Virgo]

Yes, and Peravia, Baninter and Mercantil are just a sample of those that have failed......

Most people do not have the time nor resources to investigate each and every bank.....

Iy you have 14MM dolars to invest or deposit and have no time to investigate you have a problem.

Maybe you can hire a reputable financial management firm and have them manage the money for you.

Anyway, just looking at the banks that have survived the longest would be a good start. Poorly run banks do not live long, for obvious reasons.

 

[Virgo]

Yes, but where do you bank ? Dont defend where you would never put more than day to day spending money.

READ the post to which you are replying.

Several Dominican banks have an excellent track record. I cited a few of them.

Financial bigotry is not a sound money-making strategy

 

[playacaribe2]

Show me a source. I think you are confusing the Central Bank lending rate (to banks) with the foreign exchange rate.

It has been posted countless times on various threads;

http://www.bancentral.gov.do/statistics/exchange_rates/

The government sets the bank rate....and has for many years.


Respectfully,
Playacaribe2

 

[Virgo]

http://www.bancentral.gov.do/statistics/exchange_rates/

The government sets the bank rate....and has for many years.

*WRONG*.

They are CALCULATING an average based on actual free-market transactions.

That is why they are under http://www.bancentral.gov.do/statistics/

STATISTICS.

 

[Bronxboy]

Let's keep it civil, ok?

 

[rfp]

READ the post to which you are replying.

Several Dominican banks have an excellent track record. I cited a few of them.

Financial bigotry is not a sound money-making strategy

Financial bigotry ? Bro ... you got no clue. I have invested money here and its worked out great. OTOH common sense indicates that if you have money sitting at low interest rates its better to do it in the First World. Im not calling out Dominican banks here, I am calling you out. You wouldn't place more than 7-10 k in a Dominican account when you have other options, why are you such a proponent ?

 

[playacaribe2]

*WRONG*.

They are CALCULATING an average based on actual free-market transactions.

That is why they are under http://www.bancentral.gov.do/statistics/

STATISTICS.

These are the rates....set for today by the Central Bank;

http://www.bancentral.gov.do/tasas_cambio/TMI4001.pdf?s=1461955187632

But I will be sure to have my wife call her tio and tell him that he can set the rate he wants....at the bank the family founded and that you have mentioned above.


Respectfully,
Playacaribe2

 

[Virgo]

These are the rates....set for today by the Central Bank;

http://www.bancentral.gov.do/tasas_cambio/TMI4001.pdf?s=1461955187632

But I will be sure to have my wife call her tio and tell him that he can set the rate he wants....at the bank the family founded and that you have mentioned above.

You need to find the DEFINITION of spot rates. AFAIK this is the definition copied and pasted from their site:

La Tasa de Cambio de Referencia del mercado es calculada como un promedio ponderado de todas las transacciones realizadas por Entidades Financieras y Agentes de Cambio antes de las 5:30 p.m. para el caso del d?lar y el euro. Las otras monedas convertibles son calculadas usando las cotizaciones internacionales respecto al d?lar estadounidense que proporciona el MFI. Se publica diariamente antes de las 6:30 p.m.
http://www.bancentral.gov.do/movil/mercado_cambiario/


As I said before, it is just an average of actual free-market transactions.

I have inquired exchange rates with banks and have found that just by walking across the street from a bank to another or even within the same mall I can get a signicantly different better rate.
And the banks may change the rate within the same day.

 

[pauleast]

Financial bigotry is not a sound money-making strategy

Lol, please tell me you're joking

 

[reilleyp]

These are the rates....set for today by the Central Bank;

http://www.bancentral.gov.do/tasas_cambio/TMI4001.pdf?s=1461955187632

But I will be sure to have my wife call her tio and tell him that he can set the rate he wants....at the bank the family founded and that you have mentioned above.


Respectfully,
Playacaribe2

Is it possible that both of you are correct? Since all the banks charge a different rate, can it be said that the government SETS an official rate, based on a CALCULATION of those various exchange rates in the economy, plus or minus the nudge that the government wants the rate to move toward?

 

[pauleast]

I have never heard of ANY financial adviser, stock broker or wealth management expert suggest placing money in the D.R as part of a sound well balanced portfolio. There are way too many other sound and secure instruments available to put your money into to even remotely consider the D.R. ..as stated day to day money for incidentals only.

 

[playacaribe2]

You need to find the DEFINITION of spot rates. AFAIK this is the definition copied and pasted from their site:

La Tasa de Cambio de Referencia del mercado es calculada como un promedio ponderado de todas las transacciones realizadas por Entidades Financieras y Agentes de Cambio antes de las 5:30 p.m. para el caso del d?lar y el euro. Las otras monedas convertibles son calculadas usando las cotizaciones internacionales respecto al d?lar estadounidense que proporciona el MFI. Se publica diariamente antes de las 6:30 p.m.
http://www.bancentral.gov.do/movil/mercado_cambiario/


As I said before, it is just an average of actual free-market transactions.

What you said before was;

"As of today (and for many years) Dominican banks are free to buy and sell Euros and US dollars at a floating exchange rate set by the market (not the government)."

And here is the original law:

Organic Law no. 6142 of December 29, 1962, authorized the central bank to promote and maintain favorable monetary, foreign exchange and credit conditions for the stability and development of the national economy. The central bank's functions include regulating market liquidity levels by: determining deposit reserve requirements for banks; implementing lending limits when necessary; and issuing negotiable securities. Additional functions include controlling movements of the exchange rate and introducing resolutions pertaining to the financial system.

And here is the official letter, issued by the Central Bank, giving the current exchange rate range;

http://www.bancentral.gov.do/tasas_cambio/tasaus_mc.pdf


And that is why you see small fluctuations from bank to bank, cambio to cambio.

But that rate is NOT set by the free market, but rather by the Central Bank.



Respectfully,
Playacaribe2

 

[Virgo]

What you said before was;

"As of today (and for many years) Dominican banks are free to buy and sell Euros and US dollars at a floating exchange rate set by the market (not the government)."

And here is the original law:

Organic Law no. 6142 of December 29, 1962, authorized the central bank to promote and maintain favorable monetary, foreign exchange and credit conditions for the stability and development of the national economy. The central bank's functions include regulating market liquidity levels by: determining deposit reserve requirements for banks; implementing lending limits when necessary; and issuing negotiable securities. Additional functions include controlling movements of the exchange rate and introducing resolutions pertaining to the financial system.

And here is the official letter, issued by the Central Bank, giving the current exchange rate range;

http://www.bancentral.gov.do/tasas_cambio/tasaus_mc.pdf


And that is why you see small fluctuations from bank to bank, cambio to cambio.

But that rate is NOT set by the free market, but rather by the Central Bank.

I don't know how good your Spanish is, but that letter does NOT say what you think it says.

1) Which range are you talking about? There is a BUYING and SELLING rate. That is not a range.
If that meant what you think it does, every bank would by buying and selling and the EXACT respective rate.

2) They actually explain what the rates are:
"an average of the spot MARKET" (they actually use the word MARKET) for today.

They explain that THEY will use those rates for THEIR purposes. That is, they will use those rates every time there is a reason for THEM to convert between DOP and USD, for THEIR purposes. As a banking person you should know that there are situations in which the Central Bank may need to use an exchange rate.

OBVIOUSLY, if the CB had set the exchange rates (for everyone else to buy and sell) it would make zero sense to compute "averages" because all transactions would be made according to the rates that the bank itself had set the previous day. Can you see that?

 

[playacaribe2]

I don't know how good your Spanish is, but that letter does NOT say what you think it says.

1) Which range are you talking about? There is a BUYING and SELLING rate. That is not a range.
If that meant what you think it does, every bank would by buying and selling and the EXACT respective rate.

2) They actually explain what the rates are:
"an average of the spot MARKET" (they actually use the word MARKET) for today.

They explain that THEY will use those rates for THEIR purposes. That is, they will use those rates every time there is a reason for THEM to convert between DOP and USD, for THEIR purposes. As a banking person you should know that there are situations in which the Central Bank may need to use an exchange rate.

OBVIOUSLY, if the CB had set the exchange rates (for everyone else to buy and sell) it would make zero sense to compute "averages" because all transactions would be made according to the rates that the bank itself had set the previous day. Can you see that?

The Central Bank polls the Banks and Cambios and then archives on their site an average exchange rate, both on the buy and sell side.....that is a backward looking statistic....as you cannot know the exact average rate for a given day until the data has been submitted and the day concluded.

The referenced letter from the Banco Central sets the forward buy/sell rate....but it sets it...not the market.

I did not make the law cited above, nor can I make you read it, but the market does not set the exchange rate, the Central Bank does....with small allowable differences from bank to bank and cambio to cambio.

If you have a citation indicating that the market place sets the exchange rate as you continue to allude to, please post it. My wife's tio would be very interested to read it.


Respectfully,
Playacaribe2

 

[Virgo]

The Central Bank polls the Banks and Cambios and then archives on their site an average exchange rate, both on the buy and sell side.....that is a backward looking statistic....as you cannot know the exact average rate for a given day until the data has been submitted and the day concluded.

Do you actually read what YOU write? Aren't you saying that the CENTRAL BANK ASKS the banks and exchange houses for THEIR rates?

Why on earth would the Central Bank ask the banks for their buy/sell rates IF IT WAS THE CENTRAL BANK who told them the rates to begin with?

Why?

If the Central Bank told the banks they must buy dollars at 49-1, then that it what they have to do. And if they did deviate from the CB there would be some sort of penalty for not following the CB's rates.

It is very clear that the Central Bank is FOLLOWING the banks and exchange houses, not the other way around.

 

[DRob]

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

Exactly. There are perfectly healthy cities and schools in the U.S. offering north of 4% on tax-free municipal bonds. And that's just for folks looking for safe and boring income, there are other investments available.

Why would you risk your cash over a max net of 2.5%?

 

[Virgo]

Why would you risk your cash over a max net of 2.5%?

You have to compare apples to apples. We are comparing CD rates to CD rates.
A one-year CD rate by a BOfAm-type bank is about 0.15 %. In the DR, the DOP CD rate would be at least 2.5% over devaluation.
That is almost 20-times (2000%) higher rate. Some may find that to be a good enough reason to take the (small) risk.

Someone posted that the DR tax-free bond rates are 9%, which would be almost two-and-a-half times that you cite.