- Thread starter PeterInBrat
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Putting money into Dominican Cert of Deposits?
It can be a worthwhile investment for discretionary cash you would otherwise use for vacations or entertainment. I would never recommend risking retirement savings on it.
You can buy special certificates of deposit(issued by Banco Central) from several of the local banks. I purchased one at BHD about two years ago(I have since sold it) and a friend of mine bought his at Banco Popular.
Your main risk is the currency devaluation. So far this year it has been about 3% based on the USD. Right now I think the best you can get is 10%, so, less 3% devaluation and 10% tax deducted by the bank on your semi-annual interest payments, and you're netting 6%. Personally, I don't think it's worth the risk.
If you are not a gringo and so do not think in terms of US dollars contra Dominican pesos and think solely in US shares, then there are so many good investments around the world with great yields .. people here are thinking only in terms of US dollars ..for people who deal in sterling, euros and Canadian or Australian dollars , all these floating currencies are likely to rise or fall against the US dolar in roughly the same percentage. The expected increase in US interest rates later this year has , in my opinion, largely been factored into current conversion rates . The Dominican peso , which is pegged and not floating . is different to emerging currencies because the central bank and the major banks have proved through the difficult recent times to be rock solid .
The hardest thing for Americans to understand in this and in so many other matters is that the DR is a stable well managed economy not like Argentina, Brazil , Venezuela and some central american countries . The risk of putting money into the Banco Central certificates is minimal in terms of losing money and also next to minimal against losses in currency if you are not an Ameican .. I am not.
The hardest thing for Americans to understand in this and in so many other matters is that the DR is a stable well managed economy not like Argentina, Brazil , Venezuela and some central american countries . The risk of putting money into the Banco Central certificates is minimal in terms of losing money and also next to minimal against losses in currency if you are not an Ameican .. I am not.
.The expected increase in US interest rates later this year has , in my opinion, largely been factored into current conversion rates
I will note that and we can revisit when rates do go higher and then watch the Euro go lower (currently at 1.12/1.00 versus the dollar).
The Dominican peso , which is pegged and not floating . is different to emerging currencies because the central bank and the major banks have proved through the difficult recent times to be rock solid .
The DOP hit the brink and was rescued by the IMF back in the early 2000's. Rock solid like Baninter and the other banks that went under?
The hardest thing for Americans to understand in this and in so many other matters is that the DR is a stable well managed economy not like Argentina, Brazil , Venezuela and some central american countries . The risk of putting money into the Banco Central certificates is minimal in terms of losing money and also next to minimal against losses in currency if you are not an Ameican .. I am not.
The DR is classified as an emerging market with a bond rating of junk.....and a junk rating does NOT carry "minimal" risk.
Money does not know or care about nationality....so I am not sure how your risk is minimal....if you are not an American. When the peso devalues, it does not pick or choose which currency to devalue against.
The DR peso is an equal opportunity risk for all.
Respectfully,
Playacaribe2
The IMF most certainly did not rescue the IMF and the DR was not on the brink in the early 2000s ..that is quite untrue . the DR availed itself of borrowing rights of the G20 countries after the London G20 meeting and pursued an active public works programme . It was a wonderful decision by the Dominican Central Bank and the results are to be seen in the new Zona francas and in the Duarte Highway upgrade for example . The DR had positive growth in the economic downturn ..one of the few countries that did .
Baniter Bank was more than 10 years ago and the Government stepped in at great cost. Since then the only bank that has had problems is the rcent small Peravia Bank which was essentially a Venezuelan Bank here in the DR .
Junk is not a term in the ratings system but I assume that worthless bonds would be junk . The rating agencies list the DR bonds as speculative and the country as stable .
The Central bank moves the peso against the US dollar and not against other currencies and the peso has been been falling against the US dollar not as a result of weaknesses here but of increased optimism in the US dollar ...Nearly all currencies have fallen against the US dollar this year because the there are those who see the US economy as stronger now ..so the peso has been keeping steady with other currencies .. But I do not trade currencies .
I really do not want to go on with this.. Americans always see their country as the benchmark in all matters ..everyone else is inferior . Respectfully Kipling 333
Baniter Bank was more than 10 years ago and the Government stepped in at great cost. Since then the only bank that has had problems is the rcent small Peravia Bank which was essentially a Venezuelan Bank here in the DR .
Junk is not a term in the ratings system but I assume that worthless bonds would be junk . The rating agencies list the DR bonds as speculative and the country as stable .
The Central bank moves the peso against the US dollar and not against other currencies and the peso has been been falling against the US dollar not as a result of weaknesses here but of increased optimism in the US dollar ...Nearly all currencies have fallen against the US dollar this year because the there are those who see the US economy as stronger now ..so the peso has been keeping steady with other currencies .. But I do not trade currencies .
I really do not want to go on with this.. Americans always see their country as the benchmark in all matters ..everyone else is inferior . Respectfully Kipling 333
The IMF most certainly did not rescue the IMF and the DR was not on the brink in the early 2000s ..that is quite untrue . the DR availed itself of borrowing rights of the G20 countries after the London G20 meeting and pursued an active public works programme . It was a wonderful decision by the Dominican Central Bank and the results are to be seen in the new Zona francas and in the Duarte Highway upgrade for example .
Well, I guess we will agree to disagree on this point.
Junk is not a term in the ratings system but I assume that worthless bonds would be junk . The rating agencies list the DR bonds as speculative and the country as stable .
https://en.wikipedia.org/wiki/Bond_credit_rating
The Central bank moves the peso against the US dollar and not against other currencies and the peso has been been falling against the US dollar not as a result of weaknesses here but of increased optimism in the US dollar ...Nearly all currencies have fallen against the US dollar this year because the there are those who see the US economy as stronger now ..so the peso has been keeping steady with other currencies .. But I do not trade currencies .
Again, agreeing to disagree. The central Bank has to some extent kept the peso low in order to encourage both exports and tourism. Further, with debt and deficit spending mounting and international reserves at a paltry 3.3 months of payments....if they tried to strengthen the peso to much...they would be committing economic suicide. It is not solely due to optimism in the dollar.
I really do not want to go on with this.. Americans always see their country as the benchmark in all matters ..everyone else is inferior . Respectfully Kipling 333
I see investment opportunities and assess risk accordingly. No where did I advocate everyone else as inferior....but in the investment context.....just riskier.
Your anti-US comment is unnecessary and not germane to the discussion.
Respectfully,
Playacaribe2