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Thread: Will the pesos be devalued Soon?

  1. #1
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    Default Will the pesos be devalued Soon?

    The following article is Copied from the Sosua News Nov 14, 2008.

    Since Dominicans abroad are sending less money (dollars and euros) home to the families here, tourism is falling slightly, and exports (of bananas to Europe, for example) have dropped, there is less foreign currency in the country. The Dominican Republic imports almost everything, and needs to pay for these items in dollars or euros. As there is less foreign currency coming into the country, this pushes up the peso. In order to buy dollars for imports, companies are now paying more pesos for foreign currency. In order to prevent this, the national bank plans to keep the peso stable (at 35.5 per dollar) by injecting 50-100 million dollars into the market. However, if the crisis continues for a long period, the central bank will not have sufficient funds to continue this strategy. So, at some point, the peso will probably be devalued.
    Tourists will temporarily find prices lower, as they get more pesos for their dollars or euros, but, the import situation will mean that prices will rise quickly, and tourists will not really benefit. However, for Dominicans (who are paid in pesos) this will be disastrous - they will see prices in the shops being doubled, but their salaries don't keep up with inflation.

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    I believe within the next 6-9 months the DR will really feel the impact of this world wide economic recession. I really see some tough times ahead for many people in DR.

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    Default Plenty of Platanos

    [QUOTE=swooperman;707287]The following article is Copied from the Sosua News Nov 14, 2008.

    The Dominican Republic imports almost everything, and needs to pay for these items in dollars or euros.


    From my research-- which is pretty high level coming from the Department of Agriculture and IICA, the DR is essentially food sufficient. It imports only 15% of its food and that is mostly stuff that it WANTS not that it needs. It seems that the main thing that the country imports is OIL and if there were a really forward looking push -- such as attracting a manufacturer of Solar Panels from Germany into the FTZs and taking the country GREEN - using the sugar cane debris for car fuel (which I understand is much more efficient than corn ethanol )-- could move the nation way ahead of the curve.

    My understanding is also that the IMF has a lot of control over where the peso sits..... I think the whole planet is in this one together - it isn't just the DR.

    And look at the bright side-- fewer cars!!

    Wouldn't it be wonderful to see (and not hear!) electric motorbikes?
    http://www.electricmotorbike.org/index.php?page=lectra

    I know, dream on....

    But... well... necessity is the mother of invention and lest we forget, the country actually does have more trees than it did 40 years ago.

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    The peso won't devalue much as long as the government keeps it artificially high...I don't believe they plan to let it float freely any time soon.

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    No, The Central Bank has worked really hard to maintain the peso as it is right now, almost a month ago they injected US$100 millions to the economy so the peso can stabilize because some banks were speculating with the exchange rate. Interest rates are on the roof and will be there until midyear of 2009 when they will start to lower it gradually to control inflation and the exchange rate.

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    [QUOTE=
    Tourists will temporarily find prices lower, as they get more pesos for their dollars or euros, but, the import situation will mean that prices will rise quickly, and tourists will not really benefit. However, for Dominicans (who are paid in pesos) this will be disastrous - they will see prices in the shops being doubled, but their salaries don't keep up with inflation.[/QUOTE]


    Memories of the time of 1x50 (even 1x55) are still very fresh and alive in my memory. And for visitors/tourists/expats it was BEAUTIFUL. It was the life it is supposed to be.
    Especially for those who buy only local (not imported) products and use local services.

    True, it was BEAUTIFUL.

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    Default Yes but hell the other way around

    Quote Originally Posted by AK74 View Post
    Memories of the time of 1x50 (even 1x55) are still very fresh and alive in my memory. And for visitors/tourists/expats it was BEAUTIFUL. It was the life it is supposed to be.
    Especially for those who buy only local (not imported) products and use local services.

    True, it was BEAUTIFUL.
    Yes but the lower the peso, the more the international debt. The debt has to be paid back in dollars, right? So does it work out in the long run? If they can indeed keep the peso stable, isn't it a good thing for the country as a whole?

    I know that the hotel owners are pushing for a higher peso exchange but it seems that they are the only ones who benefits...doesn't the rest of the economy suffer? Everything else imported - cars, machines, paper, oil, ink, -- all become more expensive.

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    Quote Originally Posted by AK74 View Post
    Memories of the time of 1x50 (even 1x55) are still very fresh and alive in my memory.


    True, it was BEAUTIFUL.
    ...and it was HORRIBLE for the Dominicans and most others in the long run. Prices soared on everything from Milk to Concrete and have not gone down as much. I suspect it will happen again, but I feel sorry for those who derive their income in pesos.

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    Quote Originally Posted by Castellamonte View Post
    ...and it was HORRIBLE for the Dominicans and most others in the long run. Prices soared on everything from Milk to Concrete and have not gone down as much. I suspect it will happen again, but I feel sorry for those who derive their income in pesos.
    true.
    agree.

    there is no such thing that is good for every one.

    something that is good for one is bad for another.

    only communism teaches otherwise.

    in real life if one becomes rich - it is at expence of some one (s)else.

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    A Dominican that lives in the states sends $100 home every week. The dollar is worth 50 pesos. He has 5000 pesos to spend as he pleases. At 35 pesos to the dollar it only comes out to 3500 pesos. Many Dominican families would love to see the rate go back up to 50 to 1.

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