Interest Rates

Ceasar Garcia · #1 10-01-2008, 01:00 PM

Does anyone know what the current Interest Rates paid on U.S. Funds are ?

I went to Banco Leon website and, it said nothing. I am trying to AVOID having to go to Banco Leon and, Banco Central and, spend all day there to find out.

Also, How long are the CD's for ? Can I down load the rules and regs in English ?

If I put my money in a CD will they pay me monthly into a checking or savings account ?

Any Information: PLEASE ???

catcherintherye · #2 10-01-2008, 01:16 PM

Banco Central-GOOD NEWS FOR SAVERS

sweetdbt · #3 10-01-2008, 01:40 PM

I believe the OP is asking for rates on a US dollar CD, not pesos.

Sanation · #4 10-02-2008, 02:32 PM

I made enquiries with our business banker at BHD a couple of weeks ago. The best rate we could get on US$ was about 3% on a 120 day term deposit.

The rate is much better for RD$ at around 16%. I am looking at converting a lumpsum of US$ to RD$ and putting in a term deposit.

The Peso has been extremely stable the last 6 months, so if you are prepared to hedge your bets, it could be a viable option.

Tamborista · #5 10-02-2008, 03:04 PM

Quote:

Originally Posted by Sanation

The Peso has been extremely stable the last 6 months, so if you are prepared to hedge your bets, it could be a viable option.

The tasa has gone from 33.5 to 35 in that period, a 4.4% devaluation of the RD Peso.

How does one "Hedge" a large RD Peso position?

Lambada · #6 10-02-2008, 03:52 PM

Quote:

Originally Posted by Tamborista

How does one "Hedge" a large RD Peso position?

Er....by only having a small RD peso position? Just enough to generate sufficient to pay the monthly bills.

Tamborista · #7 10-02-2008, 04:09 PM

Quote:

Originally Posted by Lambada

Er....by only having a small RD peso position?

Thanks Lambada....I thought perhaps I might have missed out on Fx Derivitives trading on the DR Futures exchange!

tambo'

Sanation · #8 10-02-2008, 05:20 PM

Quote:

Originally Posted by Tamborista

How does one "Hedge" a large RD Peso position?

When I made the comment to 'hedge your bets' it was whether the OP is prepared to take a risk on exchanging US$ to RD$ in order to secure a substantially higher rate of interest.

If you want to get into the nitty gritty of the situation, here is Accounting 101 - Hedging is where by you reduce risk on an investment by offseting against another investment. In this case, you would hedge by exchanging your US$ to RD$ in order to receive a higher rate of interest which, in theory, will far exceed your expected return should you have only invested US$. Even taking into consideration a devaluation of 4.4% as previously suggested, you would be financially better off.

You do the math.

Tamborista · #9 10-02-2008, 06:41 PM

Sanitation:
You still failed to explain how one can "Hedge" against Foreign exchange risk in The Dominican Peso. The higher interest rate is used to attract investors in such a risky currency not as a "Hedge" against the peso going to 40.

If I am long EURUSD and short EC futures or covered calls, that is considered a "Hedge" against my downside currency risk in EURUSD.

The truth of the matter is, there is no organized derivatives market or Fx Swap market in the RDPUSD pair like the majors. One can certainly lock in to a current rate for future delivery of goods/services produced in RD Pesos, but that is not hedging oneself against Fx risk.

I certainly appreciate the introduction to accounting 101!

tambo'

Sanation · #10 10-03-2008, 01:41 PM

Tamborista

Have you never heard the term "hedge your bets"??? Hedge your bets - Idiom Definition - UsingEnglish.com

It is a commonly used phrase and was in no way said to suggest that the OP should enter in a 'formal' hedging arrangement.

Read the posts as they are written.