A worrisome development. A company owing us has been regularly paying off their debts, accessing the international market selling pesos to purchase the dollars needed. The news this week is that there is a severe shortage of US dollars in the market and banks/financial institutions have no currency available to sell to meet the demand for dollars. This feeds upon itself as those holding fx will continue to do so propping up the exchange rate vs. the Peso, and force purchasers to pay up in Pesos for access to currency...
While perhaps temporary, this disruption in the convertibility of the currency should serve as an alert to what could happen in a more serious constraint, with the peso rate devaluing as a result- something which is probably behind this situation. Last time I left the DR (December 17th, 2012) the USD / PESO was trading around 39/US....I notice today that it sits at 41/US more or less, and with no trading over the weekend it might devalue a bit more. This 7% negative move in the PESO might be what is needed for some segments to move forward, but investors in PESO instruments beware.
Heads up.
While perhaps temporary, this disruption in the convertibility of the currency should serve as an alert to what could happen in a more serious constraint, with the peso rate devaluing as a result- something which is probably behind this situation. Last time I left the DR (December 17th, 2012) the USD / PESO was trading around 39/US....I notice today that it sits at 41/US more or less, and with no trading over the weekend it might devalue a bit more. This 7% negative move in the PESO might be what is needed for some segments to move forward, but investors in PESO instruments beware.
Heads up.