The dollar conspiracy

[Golo100]

Yesterday the dollar collapsed in a matter of hours(to some people as little as 20 minutes)from(compra/purchase by exchange agency)nearly $51 to $1 to $45 to $1. This is the deepest fall ever in the history of the dollar in such short time.

It turns out that the whole thing was the latest conspiracy by the PPH to collect some real fast cash for Hippo's campaign. It all started with pressure being put on by Eligio Jaquez, Hippo's chief strategist and dirty tricks man, on all newspapers to keep news about currency from the headlines or economic news and columns. On Friday and Monday there was hardly any reference to the exchange rate. This was a trick to keep people in the dark and be unaware of the big ambush about to occur.

Then the dollar was allowed to climb up after the news that I reported on Banco Central run on certificates became a wildfire in the streets. The plan went like this...Jaquez figured that if enough information is let out about Leonel's possible default on interest payments on certificates if he gets elected, the run on certificates will turn into an estampede. Once the streets were out for dollars and it climbed as high as $53 to $1, then Jaquez and the PPH came to the rescue by calling an impromptu meeting at the palace with bank and money exchange officials. A deal was cut whereas if these people followed the PPHs strategy they would join in huge profits.

At exactly 10:00am on Monday agencies such as Vimenca, La Nacional, Los Primos, Cam-SA, Envios Boya and Santa Cruz were quoting $48 to $48.70 to purchase dollars from holders of dollars. Knowing that a huge number of people had just withdrawn big money from Banco Central and that large sums of transfers were just beginning to arrive from abroad from people who got paid at the end of the month and all this money was rushing to buy dollars, Jaquez ordered a reduction to $45 to $1 at the meeting, which was inmediately phoned in to the agencies by their bosses from the palace meeting. At exactly 1:00pm the coup was in place. Phone callers and people who drove to Maria Montez Street looking to sell their dollars at $48-49 were shocked to hear that it was changed to $45. Just to give you an idea of what a typical person would lose on that trip, on just $1000 dollars your losses would be $3700 pesos(the equivalent of the minimum monthly salary). You add to that gasoline and or transportation, time lost, parking, etc. and the losses would be incredible. But the Maria Montez Gangsters and the PPH enjoyed a good day at the market.

But that's not all. The big money lies ahead as the strategy calls for holding steady until Friday so that all the money comes in with the threat by attendants at the exchange houses that if you don't sell now, you will be sorry 'cause it will go down to $35 to $1.

This is how the dollar mafia operates in DR. My advice to everyone is, that unless you absolutely have to, don't sell your dollars. Let this people suck air. make them lose their pants. Follow the advice of "The Economist"...the dollar will go to $59 to $1. If you have to pay your bills in pesos, sell just enough to cover that and put away the rest. The losses you may have taken by the PPH stunt will be recovered if you follow my advice. In addition, stay away from Banco Central. Do not fall to the charm of Malkum's offers of 60% interest. The whole thing is a pyramid. It will collapse soon. The bank has lost almost US$24 million in reserves in just this past month alone, some of which they spent on prizes for secretaries, parties and free concert and sports tickets to support Hippo's campaign.

Golo

[Ladybird]

Thank you thank you Golo, Ive tried again to get my money, US $ today and they wont give it to me, but you've saved me a lot as I wont cash it now anyway, its worth a lot of pesos. Its important we all try to keep this posting on top so we can all stick together and hol onto our $US. What do you think will happen to the rate after the elections Golo?

[Golo100]

The only way the dollar will go is up. There just isn't any condition that could bring the dollar back to levels below $40 to $1, unless is artificially for a short period, if at all. Before December it should clear the $60 to $1 level and by the middle of 2005 will get close to $70.

And that is even if Leonel wins. Leonel has several choices. He either corrals the certificate holders by reducing their interest rates in monthly intervals or installments, while extending their expiration 'till the end of the year to see what happens, or extend expirations indefinetly or 10 years with reduced interest rates not topping 15%, or redeeming all certificates upon expiration and letting all that money loose in the economy. He may take the extreme case of moving expirations for 10 years without payment of interests, but that is too risky. Whichever way, it will place heavy pressure on the dollar and the rate will go up sky high.

Those who have dollars have the advantage of being one step ahead of inflation and can take advantage of exchange gains for longer periods than any other sector in the economy. If you own your home, you are not susceptible to rent or home purchasing increases. Rises in maintenance fees for condos take a long time to be implemented due to resistance from owners and they have choices for adjustments, such as reducing non-vital services.
TW

[Golo100]

The rate today is $44.50 to $1(compra-purchasing by agent). Vimenca sells only $100 dollars at $45.50(a joke). In larger amounts you can only find it in the streets at over $52. The profit gap gets larger. The conspiracy continues.

Banco Central has announced a decision to sell US$20 million dollars to the energy suppliers so they don't have to pay high street rates to pay their oil bill this month, therefore reducing the pressure on the dollar rate. This is contrary to their policy and the law, as it violates the rules concerning the free floating of the U.S. currency. This will add another reduction of $20 million to the $24 million loss on reserves from last month. At this rate Banco Central will have zero reserves by September. But Banco Central is a PPH electoral petty cash machine and Hippo holds their strings. BC Chairman Jose Lois Malkum either has the choice to resign or follow Hipolito's order to do as he pleases. Malkum being a yes man will not resign.

TW

[Barnabe]

Mr Golo,

I have read your post with much interest.

I do not know what happened yesterday.

At 2:30 pm I call Santo Domingo from France to check for USD exchange rate. My daughter calls Vimenca Lincoln. They kept her waiting on hold until she got tired. Called an other moneychanger. No hay dolares en venta. Third one: 50.50 to get one USD.

My encargado de venta finally purchased in the late afternoon at 45..Yes, 45, for 2000 USD.

Today, Vimenca sells at 44.50.. Over the phone they told they were selling whatever quantity. What if you go there I don't know.

Tomorrow I will buy 2000 US more, if I can find them..

The Banco Central is buying today at 48.71.

Why did the guy sell us these USD at 45? why does Vimenca sell at 44.5, even,for 100 USD, when the Banco Central say they buy at 48.71?

There is something wrong... who is lying..??

Barnabé

[Ladybird]

Golo do you know in general why its always so difficult to get the banks to release our dollars?

[Criss Colon]

Very basic reason why they don't want to give you your Dollars. "Supply & Demand"!!!!

The value of Dominican Pesos is falling in relation to the US Dollar.If I have something that is increasing in value ,on an almost daily basis,I want to hold on to it!!!

They have the "Free" use of your $$$$$$$$$$$$$$! You are learning a lesson that has been "taught" on DR1 many times over the years.Any money,Dollars,or Pesos,that you have in a Dominican bank,is ALWAYS AT RISK!!!!!!!!!!!!!!!!What good is a "So Called" ultra high interest rate,if you can't get your money????
"Laws" in the DR are at best a suggestion,and at worst can be changed many times during the "Game"! You have all been warned here many times.You have all been told how to transfer money without any risk.If you choose not to pay attention,you can suffer the consequence!
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC CCCCC

[Golo100]

But in the meantime, just take a look at what Diario Libre posted today in their "Economia" column. It seems they either copied my same words, or I just happen to be one step before them, or I just know what I'm talking about because they think like I do.

From Diario Libre today, Wednesday, May 12, 2004
"Tasas de los certificados del BC llegan al 60.43% 2:29:00 AM"

"{Santo Domingo. La estampida de inversionistas en certificados la pasada semana mostró el lado adverso de las operaciones de mercado abierto del Banco Central. El bumerán retorna inevitablemente. Las autoridades monetarias tienen que colocar cada vez más “queso en la ratonera”, para retener el circulante, pero la golosina de las altas tasas le devuelve el golpe, obligándole a emitir más dinero inorgánico, alimentando la devaluación del peso.
El 5 de mayo, las tasas de interés se colocaron al nivel más alto en los últimos nueve meses de subastas continuas. Un 60.43% de interés es más de lo que podían esperar los inversionistas.
Ningún negocio en el país ofrece tales niveles de rentabilidad. Pero, aún así, los retiros anticipados recalentaron a los bancos comerciales y a las agencias de cambio durante el fin de semana y empujaron el precio del dólar hasta RD$52.
Las tasas de interés de los certificados, que el pasado 20 de agosto de 2003 promediaban un 30%, se han duplicado tras 23 operaciones de mercado abierto. ¿Pero hasta dónde se podrá llegar en otros nueve meses? ¿Podrá contenerse esa marea?
El Banco Central ha elevado esos intereses en más de tres puntos porcentuales para garantizar las colocaciones de los certificados de inversión en los tres últimos meses. La subasta del pasado 5 de mayo, captó RD$388.1 millones por encima de la oferta de RD$ 7,000 millones, gracias a tasas de interés del 60.43%.
En diciembre de 2003, la emisión monetaria se encontraba en RD$77,482 millones y el BC consiguió una reducción notable hasta RD$64,737 millones. En abril, el bumerán comenzó su regreso, llegando a RD$66,505.8 millones.
En las últimas cuatro subastas, desde el pasado 14 de abril, el Banco Central subastó RD$35,000 millones en certificados y adjudicó RD$31,372.5 millones, el 89.6%.}"

TW

























































































































Santo Domingo. La estampida de inversionistas en certificados la pasada semana mostró el lado adverso de las operaciones de mercado abierto del Banco Central. El bumerán retorna inevitablemente. Las autoridades monetarias tienen que colocar cada vez más “queso en la ratonera”, para retener el circulante, pero la golosina de las altas tasas le devuelve el golpe, obligándole a emitir más dinero inorgánico, alimentando la devaluación del peso.

El 5 de mayo, las tasas de interés se colocaron al nivel más alto en los últimos nueve meses de subastas continuas. Un 60.43% de interés es más de lo que podían esperar los inversionistas.

Ningún negocio en el país ofrece tales niveles de rentabilidad. Pero, aún así, los retiros anticipados recalentaron a los bancos comerciales y a las agencias de cambio durante el fin de semana y empujaron el precio del dólar hasta RD$52.

Las tasas de interés de los certificados, que el pasado 20 de agosto de 2003 promediaban un 30%, se han duplicado tras 23 operaciones de mercado abierto. ¿Pero hasta dónde se podrá llegar en otros nueve meses? ¿Podrá contenerse esa marea?

El Banco Central ha elevado esos intereses en más de tres puntos porcentuales para garantizar las colocaciones de los certificados de inversión en los tres últimos meses. La subasta del pasado 5 de mayo, captó RD$388.1 millones por encima de la oferta de RD$ 7,000 millones, gracias a tasas de interés del 60.43%.

En diciembre de 2003, la emisión monetaria se encontraba en RD$77,482 millones y el BC consiguió una reducción notable hasta RD$64,737 millones. En abril, el bumerán comenzó su regreso, llegando a RD$66,505.8 millones.

En las últimas cuatro subastas, desde el pasado 14 de abril, el Banco Central subastó RD$35,000 millones en certificados y adjudicó RD$31,372.5 millones, el 89.6%.

[Barnabe]

As explained I got 2000 USD from Vimenca after the drop at 45 on monday afternoon.

This morning(wednesday) we called Vimenca: NO MORE THAN 50 (no, not 100, 50) USD!

An other changer in Zona Colonial was apparently selling at 50, but we did not buy.

Anybody selling dollars around..?

This market is a joke.

Barnabé

[Golo100]

I got $200 for you and would take them to you if you are in Santo Domingo(within our district's limits) that is anywhere I don't have to cross a bridge at $50 to $1.

TW