so whats the deal with DOP systematically losing its value to USD ?

curious29

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Sep 20, 2012
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Is it some Dominican goverment action ? it's getting weaker and weaker....from years

answers from FX specialists are more than welcome ;]
 

Deyvi

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Dec 23, 2009
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While there have been recent comments on this; there were many posters stating a couple years ago that the Peso was kept artifically low..???(change rate)
Who knows what will happen in the coming months and the next 3yrs." Keep your powder dry" in whatever place you deem comfortable.
In the past there were several of our posters that added their take on this and seemed far more learned than I.
My personal feeling is the Domincan Peso will continue to tumble regardless of movement of the Euro and the Dollar.
The US has been comfortable leaving the Dollar weak for years. Whether we still have the ability to strenghten its stance
is beyond me.
I hope some of the folks will chime in on this. In the meantime. DO NOT!!!DO NOT!! have any more than your month's expenditures in Dominican banks!!! We are probably all in for a wild ride!!!!
 

Conchman

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Jul 3, 2002
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the new tax law will increase the peso exchange because once again, people will realize its better to hold dollars than pesos that lose value. I wouldnt be surprised if it goes up to 42 in a few months, despite the gov. putting pressure on the exchange houses.
 

yapask1

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Jul 23, 2012
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6-10% per year devaluation against the dollar is normal and planned. UK pound lost 20 % of value against dollar in 3 months a couple of years back.

yapask1
 

pelaut

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Aug 5, 2007
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The peso was introduced at par with the dollar. It has been falling like a leaf ever since — steep dips and stalls with shallow recovers, but inevitably down. Is that a surprise to someone?
 

Hillbilly

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Jan 1, 2002
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When 20% of the population is living off of the 20% of the population that works and pays taxes,,,and the gubmint continues to promote dependency, sh!t happens.

Going over the 40 to 1 "barrier" woke a lot of people up...So let's see: Hipolito is blamed for the exchange rate going to 50+, okay it happened on his watch. But his illegal decision to pay back every penny held by BanInter also had two consequences that most do not think about:
1) The huge so-called "deficit quasi-fiscal" which is the money the Central Bank owes on interest earned when the CB tried to gather in all of those billions Hipolito paid out that caused the exchange rate to go over 50. They did this by offering interest rates that during one auction reached a wee bit over 60% APR!! (Of course this held just for a week or ten days, but people were playing with tens of millions of pesos, so a week or so at 60% APR= a lot of quick money)

2) Anyway, a lot of the money was taken off the streets, the exchange rate went down into the 20s. Where the free zone companies began to cry..

And so the PLD, which never tired of reminding the electorate that it was Hipolito who let the exchange rate go to 50, always forgot to mention that the Central Bank's policies (with Hipolito's approval) also kept thousands from going broke!

And now, the great "keepers of macro-economic stability" are faced with a reality they cannot blame on Hipolito: their social and economic policies have put the DR is a hole they are having trouble getting out of.

Time will tell....


These are interesting times.

HB
 

cobraboy

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Jul 24, 2004
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Inflation is a common but insidious strategery to pay for gubmint debt.
 

curious29

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Sep 20, 2012
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sure, but GBP to USD is now stronger...so the exchange rates fluctuates - once goes down and up....DOP to USD only lose its value....its steady downhill ;-)
6-10% per year devaluation against the dollar is normal and planned. UK pound lost 20 % of value against dollar in 3 months a couple of years back.

yapask1
 

Olly

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Mar 12, 2007
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Curious29,
It has been loosing its value for some time - look at this 2 year chart XE.com - USD/DOP Chart
It tends to hold during the tourist season and go out during the weak tourist time like September/October/November.
Over five years it has weakened by about 18% or 3.6 percent per year.
Its probably going to continue this way too. So expect 41,5 to US$ in September/October 2013

Olly and the Team
 

AlterEgo

Administrator
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Jan 9, 2009
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The peso was introduced at par with the dollar. It has been falling like a leaf ever since — steep dips and stalls with shallow recovers, but inevitably down. Is that a surprise to someone?

I remember those 1:1 days well. We got all excited when we got 1:1.18 on the street back in the 70s
 

nas

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Jul 1, 2009
559
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Anyone with lots of US $$ to invest could very likely double his money in about 4 years... buy in at 60 to 1. sell at 30 to 1.


Just like when Hipolito was at the helm.
 

windeguy

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Jul 10, 2004
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Anyone with lots of US $$ to invest could very likely double his money in about 4 years... buy in at 60 to 1. sell at 30 to 1.


Just like when Hipolito was at the helm.


How is someone going to get in at 60 to 1, when the peso is just getting to 40 to 1?
And what is going to make the DR Peso go from 60 to 1 to 30 to 1 should it reach 60?
 

nas

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Jul 1, 2009
559
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It is climbing, isn't it? It got close to 60 to 1 during Hipolito, didn't it? It then came down to the low 30s, didn't it?

In forex investments and regular trading, history is taken into consideration. The levels of support and resistance are constantly tested.

The DR government could inflate or deflate its currency despite any external forces acting on the market.

If the inner circle congregates and its members decide to double or triple their fortunes, they will make it happen; despite of any economic indicators :chinese:
 

Mauricio

Gold
Nov 18, 2002
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The currency of an economy with a structural trade deficit will automatically lose value over time, while there is structurally more need to change that currency for a foreign currency (change pesos for dollars) to be able to pay the imports. At the end of the year this is always stronger, while many business are importing much more goods, that have to be paid and make the dollar rise.

By their monetary policy a government can affect the devaluation or revaluation of their currency (disminuying the volume of money or raising it, playing with interest rates) but this creates an unbalance. There is a natural equilibrium. When it was said the pesos was artificially high in the past years, it's like saying the policies of the government created an unbalance.

However I think a small volatile economy as the DR needs an artificial exchange rate to offer a stable economic environment to do business / make investments etc, you can't let the market do its job. By letting the dollar gain some value now I suppose the government is compensating for the unbalance in the system. It seems they want to bring it up until 42 in February, to stabilize its there.
 

windeguy

Platinum
Jul 10, 2004
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It is climbing, isn't it? It got close to 60 to 1 during Hipolito, didn't it? It then came down to the low 30s, didn't it?

In forex investments and regular trading, history is taken into consideration. The levels of support and resistance are constantly tested.

The DR government could inflate or deflate its currency despite any external forces acting on the market.

If the inner circle congregates and its members decide to double or triple their fortunes, they will make it happen; despite of any economic indicators :chinese:

What you say could happen if and only if the similar circumstances present themselves again. While some things are possible, most things are unlikely and I see the situation you suggest as very unlikely.

A steady downward trend of the value of the peso with occasional minor fluctuations is much more likely than a repeat of the dramatic situation that happened before.