Future of the peso from DR1

[JDR]

The recent DR1 news had a link to a Nov. 4, 2004, Goldman Sachs analysis of the DR ecomonmy & debt. [Credit to Geoff Gottleib, of Goldman Sachs].
Most of the piece is highly technical; I' m not an economist; reading it is tough lsedding; I'm from New England.
Well worth perusing! Part of the G S predictions - the future course of the Peso; according to the G S crystal ball: [all #s are DR Pesos to US$]:
2005 - 37.5; 2006 - 41.5; 2007 - 43.7; 2008 - 46.1; 2009 - 48.5.
Note to possible purists; this part of an G S extensive chart is entitled "Nominal Exchange Rate"; I assume that this is, in effect, "actual predicted exchange rate". Economists may possibly disagree; I welcome constructive criticism.
The proverbial bottom line: - The Peso is presently trading @ 28 - 29. In 4 years, according to G S, it will be trading at 46.1. If G S is correct, or reasonably accurate, the Peso will lose 65% of its value in the next 4 years [18.1 / 28 = 64.6%].
Who wants to bet against G S? What annual interest rate is adequate to compensate a prudent investor for this risk? This probability? 20% 25% 30% 35%? Not a prudent investment at nearly any price or interest rate.
One American's opinion: keep your assets in US$ or Euros.
G S also curiously predicts that the COLA in the DR for the nest 4 years will average 8%? With 32% inflation & 65% Peso decline over 4 years, all DR Peso investments seem like losers.
ps. My sincere thanks to DR1 for making this quality of imporant info avialable to us. So readily! A real public service! Thank you! Please keep them coming.

[cremaconpalo]

...in summary: Think of the peso (and the D.R. in general) as "a sow's ear"... :(

...Conventional wisdom holds that, "You can't make a purse out of a sow's ear"!

The only thing worth investing in D.R. is my "jungle juice"! :D

...just one man's opinion. :wink:

[Jimmydr]

Its just a vacation spot, if you remember that, well you can't get hurt.

[WSJ3]

Either way with DR you are still getting the most bang for your buck.

[Mister NYC]

That is so true WSJ! Let's all hope we see the rise of the dollar again after x-mas like we did last year.

[WSJ3]

That is so true WSJ! Let's all hope we see the rise of the dollar again after x-mas like we did last year.

I hope so buddy...I will be there in January 2005.

[Summit]

Guys the US to DP (Dominican Pootang) is always good, the rate will be 35-40 all year (2005) so come on down and enjoy

[BrooklynBeas]

enviosboya.com yesterday raised the rate to 28.50 from 26.50 all last week.... things may be looking better for Beas' Birthday!!

[JD]

DR1 news reported the DR Governmnet set it's 2005 budget at 37-1.

That will work.

Happy Hunting,

JD

[MisterPink]

CENSORED

[Dick Dawson]

I'm curoius to find out how the country fared under Leonel's first term.

[MisterPink]

CENSORED

[BrooklynBeas]

They voted him out because he was "corrupt".
...........and then there was Hippo!
It's a cycle.....out with the bad, in with the good(less corrupt)
The Peso was fairly stable 13 -15.
So not as much Currency Manipulation.
Its a new playground for wealthy/connected Dominicans.

Read the Archives of DR1 pre 2000 and see how bad Leonel was!

I think it was 16-1 when he left office and it went nuts when Hungry Hungry Hippo came in

[MisterPink]

CENSORED

[BrooklynBeas]

You are correct, it was 16 when Baldie arrived.
I did not go nuts (above 20)until late 2002 Bro!
I have been going since 1997.
I remember 14.5!



http://www.oanda.com/convert/classic

I remember 20.20RD-$1USD thats what i got at hotel melia in SDQ on my first trip in Dec 2002.... All i can remember paying girls is in Spa Michelle i paid this hottie 800 pesos ($40) for a 1 hour massage and BBBJ... she was one of my best experiences in DR even though i didnt have sex with her.... It took a while to get over her... wonder what the rates are nowadays in there... im sure i paid too much back then but it was my first trip and some dominican dude brought me in there (he probably got a big chunk of my money from there)

[MisterPink]

CENSORED

[D_W_]

Spin it anyway you want, this has almost all to do with US Treasury policy.

How can you expect the Dollar to go up in DR and not do something about the Euro or the Canadian $.

The dollar is weak because that's how Bush boy wants it for his irresponsible management of the economy. But it's not all his fault, there is just so much American Dollars out there...we're just simply importing way too much.

Oil is not helping....

No folks...DR is just going to have to adjust it's prices to the new Dollar.

[nuhomet]

Conversion Table: USD to DOP (Interbank rate)

Time period: 11/01/04 to 11/17/04.
Daily averages:
11/01/2004 31.4060
11/02/2004 33.0330
11/03/2004 32.050
11/04/2004 32.010
11/05/2004 31.070
11/06/2004 31.010
11/07/2004 31.010
11/08/2004 31.010
11/09/2004 30.0010
11/10/2004 29.0
11/11/2004 30.0480
11/12/2004 29.080
11/14/2004 25.9570
11/15/2004 25.9570
11/16/2004 26.0610
11/17/2004 29.0190

[JDR]

At least its falling now! I will be happy at the 35 - $1 level.

[Reel Deal]

Spin it anyway you want, this has almost all to do with US Treasury policy.

How can you expect the Dollar to go up in DR and not do something about the Euro or the Canadian $.

The dollar is weak because that's how Bush boy wants it for his irresponsible management of the economy. But it's not all his fault, there is just so much American Dollars out there...we're just simply importing way too much.

Oil is not helping....

No folks...DR is just going to have to adjust it's prices to the new Dollar.Dogwood, with all due respect: BULL FUCKING SHIT!

Dude, virtually ALL currency exchange rates is purely a function of Supply and Demand. Per-i-fucking-od.

The DR gov't can "set" the rate at 10:1 all day long into perpetuity. But as long as the need for dollars in the economy is strong, no one will take the gov'ts rate. Hell, mongers will walk a mile to get an extra peso for their dollars now!

Additionally, monetary policy has been separated from politics in the US for many, many years. The President CANNOT do ANYTHING about it. The only person who can affect US monetary policy is the Fed led by Alan Greenspan...the single most powerful person on the planet.

Oil to the DR is not a problem. They can get all they need from Venezuela-they just can't pay for it. Chavez cut the DR a deal on oil recently.

The worldwide demand-and resulting historic high prices-is NOT fueled by the US or any nefarious conspiracy by the "Bush boys". It IS fueled by unbelievable upward demand pressure in both India and China. THEIR upward and increasing demand rate for crude oil exceeds anything the US has seen in the last 50 years.

Forgive me for being harsh, but you are in dire need of a little economic education not veiled in domestic political agenda.

[domfan]

hey guys, i remember 12,20!!!
and i srewed the chicas for 150, some real good lays.

[JD]

They voted him out because he was "corrupt".
...........and then there was Hippo!
It's a cycle.....out with the bad, in with the good(less corrupt)
The Peso was fairly stable 13 -15.
So not as much Currency Manipulation.
Its a new playground for wealthy/connected Dominicans.

Read the Archives of DR1 pre 2000 and see how bad Leonel was!

Actually he wasn't "voted" out. At the time the Dominican Constitution did not allow a president to serve two consecutive terms.

Hippolito had to change the law to run for reelection.

JD

[el_papi_chew_low]

Bear Stearns bullish on DR
Franco Uccelli, who reports on the DR market for Bear Stearns, issued a release commenting on the effects of the appreciation of the DR currency. He concludes: "Fundamentally, the DR is today in better shape than it has been for a long time." In his opinion, the country has entered into a recovery phase after the severe crisis and that the appreciation of the peso is the result of increased trust in a more sensible government and its judicious economic policies that have allowed a myriad of the country's key macro variables to improve and stabilize over the past few months.
Uccelli writes: "A tight monetary policy, a flexible and competitive exchange rate regime, and enhanced consumer and investor confidence in the Dominican government and its management of the economy have allowed the Dominican Republic's currency to notably appreciate and to achieve a degree of stability not seen since before the country's most serious economic and financial crisis in recent times erupted in May 2003. A stable currency has underpinned improvements in a number of macroeconomic variables, all of which are contributing to a reinvigorated climate of stability in the country."
He compares the peso now trading since November at around RD$30-US$1 to the RD$42/US$ level in 2004. In his opinion, "given the country's improved general outlook, country risk will likely continue to be on the upside."
He focuses on how a stable and stronger currency is easing the burden of servicing the external public debt. He says that the appreciation could translate at the going rate to debt service savings for 2005 close to 20%. The government had transacted with the IMF at a rate of RD$37-US$1.
Another positive, he explains, is the build-up in foreign reserves that has led the DR to significantly outperform its IMF reserves target for the first quarter. He notes that the DR's net international reserves (Central Bank methodology) have more than doubled since the Fernandez administration began in August 2004, increasing from US$350 million at the time to more than US$800 million at the start of February 2005. "The impressive build-up in foreign reserves has put the Dominican Republic on track to significantly outperform its IMF reserves target for the first quarter. Indeed, the country's current reserves level has put it close to meeting its target for the year as a whole," he writes.
He also comments on the effect the stronger currency has had on consumer prices. He mentions that the yearly rate of inflation has dropped to 18.8% in January, compared with 28.7% in December, and that it may fall to around 8% this month due to base effects. Forward-looking inflation is now running in the 7%-9% range, suggesting the country could-if current trends are sustained-outperform its 11%-13% IMF inflation target for this year.
Bank loans are also down as a result of the strengthening currency. He comments that after these climbed to almost 60% in mid-2004, the average interest rate paid by Central Bank CDs has dropped to around 25.5%, where it has remained since early December. "A positive side-effect of this will be a decline in the size of the country's quasi-fiscal deficit, which is estimated to fall from 4% of GDP in 2004 to 3.2% this year," he forecasts.