Dominican Interest Rates

[MisterShifterGriffter]

Hello my fellow Dominicans.

I was thinking about putting some of my savings (up to £75,000 or $112,000USD) into the Domincan Central Bank as it is paying 13% interest over a 36 month period.

I may want to emigrate from the UK and live out my retirement there in about 5 years time.

My question: Are the interest rates now stable or will they fluctuate again like they have in the past.

Is there any "catch" for foreign investors and how easy is it to get your principle sum invested back after the term has ended, and is there any way round losing 2% interest when you come to re-invest.

Any other pitfalls to consider as a non resident - and would be benefical to consider residency status?

Any other comments or sugggestions would be appreciated.

Thanks
Paul, UK

[JDJones]

There's no telling where the interest will be 3 years from now.

As far as getting your money back, it only takes a few minutes.

I'm not sure what you are talking about with the "losing 2% when you re invest.

Whatever interest they are offering when your first investment matures is what you will get.

I do not believe you need to be a resident, but you do need to have an account in a dominican bank where they will deposit your interest every month.

Last, you'll have a tough time making it on the interest from $112K, unless you live in the country somewhere, don't own a car, low rent, etc.

[CFA123]

if you let the money sit, no doubt you'll have more pesos at the end of 3 years. but with the value of the peso fluctuating, who knows if a 13% return for 36 months will be good or not? you may make or lose a bundle in spite of 13%.

about a year ago the peso was at 33.8 vs the dollar. today, around 35.9 that's about a 6% loss of buying power vs the dollar that would eat into your 13% return.

[The Virginian]

Also, at the end of the cd's life you must go to the bank and re-invest it or simply take it. It does not get ROLLED over in any way shape or form. OH, and under NO circumstance can you withdraw your money before the end of the cd has been reached.

[Tamborista]

Originally Posted by The Virginian

OH, and under NO circumstance can you withdraw your money before the end of the cd has been reached.

This is actually incorrect information. According to the following BC link, There is a cancellation penalty and you are penalized a point or two depending on when you redeem and the original terms of the CD.

Central Bank of Dominican Republic

[NotLurking]

Originally Posted by Tamborista

This is actually incorrect information. According to the following BC link, There is a cancellation penalty and you are penalized a point or two depending on when you redeem and the original terms of the CD.

Central Bank of Dominican Republic

Tamborista and The Virginian you are both correct! It depends on the type of CD the investor decides to invest in. Banco Central offers TWO type of CDs at the window (VENTANILLA DIRECTA): 'Certificados a Plazo Fijo' and 'Certificados Con Redención Anticipada y Renovación Automática'.

In the case of 'Certificados a Plazo Fijo' (Fixed term CD) the investor is not allowed to redeem the CD under any circumstance prior to the maturity date and the original investment capital does not automatically roll over into a new CD. The terms are fixed (Plazo fijo) for the life of the CD and the initial investment capital should be withdrawn on the date of maturity or shortly after because no interest will be paid by the bank.

'Certificados Con Redención Anticipada y Renovación Automática' is as you point out Tambo. The terms of the investment are more flexible but pays less interest. The investor is allowed to cancel anytime prior to the maturity date of the CD for a penalty. The penalty schedule is part of the investment terms. If the CD is not cashed out on the date of maturity, the original investment amount will roll over into a new CD of equal term, but at the current interest rate the bank is paying.

Banco Central de la Repblica Dominicana

NotLurking

[Tamborista]

Thanks for the clarification NL!

t'