The Dominican Peso Will Be 1:1 With The US Dollar Again?

Jan 9, 2004
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What about just get rid of the peso and dollarising the economy (Make the dollar the national currency?)
The number 1 reason to not dollarize is that you lose economic autonomy.

Your economic policy is, or would be, set by the US Federal Reserve, with little regard for the specific economic needs of the country.


Respectfully,
Playacaribe2
 
Jan 9, 2004
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The peso has so far held up remarkably well against the USD.............perhaps too remarkable.

For those watching, the Euro has recently plunged from 115 to trading today at low of 103 to the USD and the Japanese yen is at a 20 year low against the USD.

Yet the peso holds steady.........at least for a bit longer.............then.......................


Respectfully,
Playacaribe2
 

pinonuevo

Active member
Dec 7, 2020
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Roman
One of the greatest advantange is that the Dominican Government will not be able to devalue your savings; also it is an inflation fighting tool.
 
Jan 9, 2004
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One of the greatest advantange is that the Dominican Government will not be able to devalue your savings; also it is an inflation fighting tool.
With Dollarization that would be true.............but then the USD is not immune from inflation either.......albeit at a slower rate than the peso.

If Dollarization was the answer to many countries financial problems, many would have done it long ago.

While Dollarization would spur foreign investment (no foreign currency exchange risk), it would deprive those countries Dollarizing of their secret weapon...............seigniorage..............


Respectfully,
Playacaribe2
 

pinonuevo

Active member
Dec 7, 2020
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Roman
Are other countries in the Americas better off when they dolarized the economy; when they peg one to one to the dollar, like many economies in the the caribbean and central america?
 

NanSanPedro

Nickel with tin plating
Apr 12, 2019
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Are other countries in the Americas better off when they dolarized the economy; when they peg one to one to the dollar, like many economies in the the caribbean and central america?
I think that an example would be Panama. From appearances, they're doing well. But I don't know any details about how they're going.
 

korejdk_again

Newbie
Mar 26, 2019
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The DOP "IS" pegged to the USD "just as" HKD or SGD are (different barrios interests rule that) ....let's just say the other cousin, the MXP is at times left to be on it's own (float), yet the DOP, as a "little distant cousin" gets a break. DOP will ride the wave along (behind) the world's surfer while the wave (and direction) lasts...and there are many conflicting waves occurring right now, yet the DOP does only care about the wave the USD rides since it has no choice!
Tambo is the pro ... if he cares to comment.
 
Jan 9, 2004
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The DOP "IS" pegged to the USD "just as" HKD or SGD are (different barrios interests rule that) ....let's just say the other cousin, the MXP is at times left to be on it's own (float), yet the DOP, as a "little distant cousin" gets a break. DOP will ride the wave along (behind) the world's surfer while the wave (and direction) lasts...and there are many conflicting waves occurring right now, yet the DOP does only care about the wave the USD rides since it has no choice!
Tambo is the pro ... if he cares to comment.
"Pegging" implies a Central Bank decision to maintain a tight correlation to another currency. The trading range is generally in a narrow band. The Chinese Yuan or Renminbi is pegged to the dollar. HKG is also pegged. The SGD is not (although at one time it was pegged to the GDP (British Pound). MXP has been free floating since the 90's and has gone through a number of severe devaluations.

The DOP is not pegged to the dollar (certainly affected by it, but not pegged) as witnessed by its demise since the 1980's from 1:1 to its current status.

For a more broader view;



Respectfully,
Playacaribe2
 

El Hijo de Manolo

It's outrageous, egregious, preposterous!
Dec 10, 2021
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Dominican Republic
"Pegging" implies a Central Bank decision to maintain a tight correlation to another currency. The trading range is generally in a narrow band. The Chinese Yuan or Renminbi is pegged to the dollar. HKG is also pegged. The SGD is not (although at one time it was pegged to the GDP (British Pound). MXP has been free floating since the 90's and has gone through a number of severe devaluations.

The DOP is not pegged to the dollar (certainly affected by it, but not pegged) as witnessed by its demise since the 1980's from 1:1 to its current status.

For a more broader view;



Respectfully,
Playacaribe2
Thanks for this. Very interesting led me to a quick Google search and this background that much of I was unaware. Interesting history
"DOP (Dominican Peso)" https://www.investopedia.com/terms/d/dop.asp
 
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pinonuevo

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Roman
Lots of other currencies are losing ground against the dollar; why is the Dominican Peso gaining ground against the dollar?
 
Jan 9, 2004
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Lots of other currencies are losing ground against the dollar; why is the Dominican Peso gaining ground against the dollar?
I am not sure you can say it is gaining ground as much as you can say it gained ground.

Remittances in dollars were extradordinary. November/December saw excellent tourist numbers. Price of gold moved up nicely. All of those contributed to its International Reserves. Ditto all of its bond borrowings in dollars.

However, the headwinds are obvious and approaching, such that the President has taken the extraordinary step to warn the country that tougher times are in front of the DR.

Externally, those headwinds include worldwide inflation, the war in Ukraine etc.

Internally, the DR has been raising salaries of workers across the board and has been subsidizing both the family basket and oil imports, all of these are inflationary or lead to inflation.

Tourism has dialed back, and while good, has slipped below pre-pandemic levels.

I see no reasons the peso can gain (strengthen) against the dollar, but a myriad as to why it may begin to slip (weaken).

Hopefully, the decline, if it comes, is orderly. What has happened to the Euro and Yen recently was a quick and sharp decline in their value vis a vis the dollar, and while they can to a large extent absorb it without to much pain.................the DR does not have that luxury.


Respectfully,
Playacaribe2
 

PICHARDO

One Dominican at a time, please!
May 15, 2003
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History for you all:

The DR peso was at parity versus the US dollar on oficial Exchange. On the streets you had to pay 15 to 25 cents to get them to accept it when using it as payment outright (no exchange houses then, only banks).

The exports were stagnant for years on end, due to the high cost of DR goods, based on the purchase parity of the dollar vs the DR peso.

The nascent tourism industry at the pilot level, required a much lower DR Peso if it was ever to attract masses. The free trade zone was dead.

The gov, bankers, investors, tourism industry, etc… got together and hatched out their grand plan to devalue the DR peso via independent money exchangers. Which could buy and sell them based on a weekly rating issued by the CB.

There started the artificial devaluation of the DR peso to the dollar ever since. Remark artificial…

DR is only competitive if the Peso is devalued vs the Dollar. Now exports will suffer and tourism will be affected as well due to the purchasing power drop.

There’s no way for the DR to continue to drop the value as it used to, since It now allows the private exchange sector to play along as well.

Watch the DR peso gain up to 12 - 15% value over the dollar by year’s end.

As things stand, the US is on a recession train.
Once the EU and US used their currencies as weapons, others took heed of it and are shielding their economies as best they can for the long haul.

The DR will see this as a short term revaluation of the Peso but a crisis for exports and tourism as we know it. We are still far from being truly competitive at anything.

The cat is out of the bag and there’s no going back.
 
Jan 9, 2004
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History for you all:

Watch the DR peso gain up to 12 - 15% value over the dollar by year’s end.

Ambitious target to say the least. You are then implying a move to under 50:1.

What are/is your catalyst(s) for such a drastic move.
As things stand, the US is on a recession train.
Technical recession as defined by NBER..........yes.........but it is hard to make it feel like a real recession with a US 3.5% unemployment rate. I believe the Euro Zone to be a better candidate for recession near term........if not already.


Respectfully,
Playacaribe2
 

pinonuevo

Active member
Dec 7, 2020
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Roman
  • 1984 US$1 to RD$1.45
  • 1993 US$1 to RD$5
  • 1998 US$1 to RD$8
  • 2002 US$1 to RD$20
  • 2003 US$1 to RD$37.5
  • 2004 US$1 to RD$46.7
  • 2006 US$1 to RD$32
  • 2007 US$1 to RD$35.29
  • 2008 US$1 to RD$34.93
  • 2009 US$1 to RD$36
  • 2012 US$1 to RD$40.5
  • 2013 US$1 to RD$40.4
  • 2016 US$1 to RD$45
  • 2022 US $ 1 to RD $53.00 (Sept 1)
  • Will it get to 50.00 by December and January?
 

fuchs4d

Active member
Mar 7, 2004
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Lots of other currencies are losing ground against the dollar; why is the Dominican Peso gaining ground against the dollar?
Because the FED is inflating the dollar by generating ("printing") at a higher rate than the Banco Nacional does with the Peso.
Both, Peso and Dollar, loose against Bananas, Big Macs and services, currently the Dollar is loosing faster.
Another effect might be that lots of dollars are not being used anymore in big international trades and are flooding the circulation. The more the amount of money in circulation increases compared to the increase in products and services, the more the currency declines.

Alexander
 
Aug 6, 2006
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Give it another 10 years and the Dominican Peso will probably be worth more than the USD. America's transition to Socialism is gonna be rough. Smart people have already started preparing for it as they continue printing wellfare money out of thin air.
Quite unlikely, as the peso is linked to the dollar, and there is no "transition to Socialism" in the US. The dollar has held its value better than the pound or the Euro.
 

CristoRey

Welcome To Wonderland
Apr 1, 2014
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Quite unlikely, as the peso is linked to the dollar, and there is no "transition to Socialism" in the US. The dollar has held its value better than the pound or the Euro.
The US is absolutely transitioning to Socialism.
9 years and 342 days left in a 10 years span since I posted that comment.
Time will indeed tell.
 
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