2003News

Hypothetical calculations

If a person were to have US$50,000 deposited to a dollar savings account in the Dominican financial market at a hypothetical rate of 5 percent per annum, the money would earn in one year US$2,500.00, or, at an exchange of RD$60,000. However, if that money were to be exchanged to Dominican pesos at a rate of RD$24 to US$1, and the resulting RD$1.2 million deposited at the Central Bank?s maximum rate of 30 percent, the depositor would receive RD$360,000 pesos, or RD$30,000 a month, equaling US$1,250, or 50 percent of the yearly total for a dollar deposit. Therefore, in the space of two months, the individual would have netted the interest of one year. Accordingly, one may assume that it is conceivable that the high incentives for peso deposits will slow down the conversion of pesos to dollars within the Dominican Republic.