Leonel Speaks after Resorts & Free Zones speaks

[Don Tomas]

People are getting upset about the peso rate...

http://www.listin.com.do/cuerpos/republica/rep1a.htm

[D_W_]

People are getting upset about the peso rate...

http://www.listin.com.do/cuerpos/republica/rep1a.htm

Yeah..it's even worse..this administration refuses to devalue the peso against the dollar.

I don't what he's up to but this country lives and dies by foreign expenditure...they've been lucky because the European tourists keep coming but their economy is also suffering by the weak dollar internally.

[Don Tomas]

People are getting upset about the peso rate...

http://www.listin.com.do/cuerpos/republica/rep1a.htm

Yeah..it's even worse..this administration refuses to devalue the peso against the dollar.

I don't what he's up to but this country lives and dies by foreign expenditure...they've been lucky because the European tourists keep coming but their economy is also suffering by the weak dollar internally.

I love the part where he said that the government or Central bank doesn't voluntarily control the rate. :lol: :lol: :lol:

I guess politicians are the same all over the world. LIARS

[D_W_]

People are getting upset about the peso rate...

http://www.listin.com.do/cuerpos/republica/rep1a.htm

Yeah..it's even worse..this administration refuses to devalue the peso against the dollar.

I don't what he's up to but this country lives and dies by foreign expenditure...they've been lucky because the European tourists keep coming but their economy is also suffering by the weak dollar internally.

I love the part where he said that the government or Central bank doesn't voluntarily control the rate. :lol: :lol: :lol:

I guess politicians are the same all over the world. LIARS

Lying pieces of shit....if they don't...who does? Of course, and the voluntary part is because they probably use the excuse that they have "no choice" in raising or dropping the dollar.

This guy is in bed with the exporters....

[Reel Deal]

This guy is in bed with the exporters....When you're trying to bail your country out of a financial hell, those are the ones you want to side with. We have the same issues here in the US. People complain about cheap foreign goods and the export of jobs all the time.

Actually, the central bank doesn't really have as much control over currency valuation as you think. It's still a supply/demand function. Otherwise a strong black market, with MUCH higher rates on it, would emerge. It really hasn't.

A stable economy currency may be bad for mongering, but it's good for the Dominican people.

[D_W_]

This guy is in bed with the exporters....When you're trying to bail your country out of a financial hell, those are the ones you want to side with. We have the same issues here in the US. People complain about cheap foreign goods and the export of jobs all the time.

Actually, the central bank doesn't really have as much control over currency valuation as you think. It's still a supply/demand function. Otherwise a strong black market, with MUCH higher rates on it, would emerge. It really hasn't.

A stable economy currency may be bad for mongering, but it's good for the Dominican people.

RD, we have the opposite problem. We're not exporting as much as we should. BTW, central bank does have the ability...(look at Venezuela). DR is an American ally and it will not devalue it's currency without consulting America.

But you're right...it's supply and demand...and the dollar is over the place..because we're buying and overpaying so much. A weak dollar makes imports expensive...and the trade defecit keeps going up. It's incredible.

[Don Tomas]

Actually, the central bank doesn't really have as much control over currency valuation as you think. It's still a supply/demand function. Otherwise a strong black market, with MUCH higher rates on it, would emerge. It really hasn't.

A stable economy currency may be bad for mongering, but it's good for the Dominican people.

I am going to point out the error of those two statements...

The central bank doesn't control the rate? They have been printing less & less pesos which has strengthen their value since Leonel took office, just the opposite happened under Hippo, if he needed money he just printed more pesos which of course devaluated the peso!

As for a stable economy, there isn't one. Prices are going up and some things are getting rediculous as far as cost. McDonald's big mac meal is now US$10 due to the value of the dollar. Sure I shouldn't judge prices based on the dollar but if they have to pay for those products with dollars then their value should be based on dollars. The country has very few natural resources so most things are imported. As for the items produced there Leonel is destroying the Free Zones, I just read of another one that is on the verge of closing and that will mean 27,000 lost jobs since they cannot compete with other markets with real exchange rates.

Let's look at the BIG Picture. Percentage wise the peso has strengthen completely unrealistically against the dollar. Sure the dollar has weaken in the past year but not by half!

Leonel better watch his back, couple more free zones close (roughly 80,000 people in free zones have lost their jobs since the New Year) and he will be remembered as a worse guy then Hippo.

Couple other issues, Leonel has been postponing debt payoff, what does he expect it to disappear one day? Trying to restructure, etc. He is just postponing the real problems and in the mean time companies are getting fed up and leaving causing mass layoffs.

[Reel Deal]

DT and I discussed this via phone a few minutes ago.

A couple of comments: yes, the DR government does control the supply of pesos. However they DO NOT control the demand for other currencies. Therefore they are NOT in direct control of currency valuation. The market (i.e., the demand for other currencies) is.

The DR currency are valued against virtually all currencies, not just Euros or dollars. There are rupees, yen, pounds, etc. involved. No way can any government determine the valuation of all these at the same time without creating a Black Market.

Free Zone companies are whores. They are they because of cheap labor only. They will leave when the labor is no longer cheap (as now). They will go to the next whore. We all know about whores, and what happens when they price themselves too high.

Inflation is the core of the problem. Yes, inflation still exists; but the rate of inflation is slowing down. That is refelected in the relatively stable currency valuation. There seems to be inflation, even when the rate of change is a negative number, until it is "zero". But the inflation beast can begin to get under control even if there "seems" to still be inflation.

Lionel is not paying bills because he doesn't have the $$$ to do so: expendatures exceed tax collections. He is responsible for the debts (and printing of pesos creating inflation) rung up under Hippolito. But unlike first world countries, he doesn't have the ability to enter bond (debt) agreements through normal financial channels. That is why the IMF is so important. Look at it this way: if a person with an A+ credit rating runs a few dollars short, he can get a loan or use credit cards to tide him over until he can repay; he can restructure some debt. If a bankrupt guy needs cash, he's got no where to go except Guido, and Guido puts a lot of restrictions on him. Consider the IMF like Guido.

I stand by my statements. It's a very complex issue. But, bottom line, no central governemnt has definitive control over how it's currency is valued against others. All they can do is control the quantity of M1 in circulation.

[Reel Deal]

Oh...big, important news:

2 cases of Presidentes just arrived and being put in the cooler as I type this.

Eat your hearts out.

$2.25 each.

:D

[BrooklynBeas]

Oh...big, important news:

2 cases of Presidentes just arrived and being put in the cooler as I type this.

Eat your hearts out.

$2.25 each.

:D

they arent the same as DR pressy's are they?

[Gutter Meat]

Costs at RD$40 to US$1 in tourism
Enrique Eduardo de Marchena Kaluche, president of the National Association of Hotels and Restaurants, told Hoy newspaper that if the structure of prices in the country does not soon reflect the appreciation of the peso, there will be many firings in the tourism industry in coming months. He said in an interview that the operational costs are not in synch with the present value of the peso at RD$27 to the US$1. He said that vendors supply food, fuel, electricity, and wages on a RD$40 to US$1 rate. He said that today the gasoline sold in the DR is one of the most expensive in Latin America, and the same can be said for electricity, which costs US$0.22 kWh. He said that most hotel rates are quoted in dollars, but expenses are paid in pesos. De Marchena said that a rate of RD$37 to US$1 would be closer to reality.

[Gutter Meat]

Fernandez likes the peso as is
President Leonel Fernandez says that governance in the DR would be affected if the peso depreciates again. The Fernandez government authorities have been keeping money circulation in control in order to maintain the appreciation of the peso. Several economists have said the peso is being manipulated, and this is having a negative effect on Dominican exports, including free zone manufacturing and tourism industry. Costs have not declined in the same proportion as the peso has appreciated. Furthermore, goods and service export price elasticity is much lower than on goods and services sold to the local market. While products sold to the local consumer are doing well, not so those sold abroad.
Finance Minister Vicente Bengoa said that to increase the exchange rate from RD$28 to RD$37, as recently suggested spokesmen for the hotel industry, the government would need to come up with an additional RD$7.88 billion to pay the foreign debt. The foreign debt doubled in the past administration.

[Don Tomas]

Oh...big, important news:

2 cases of Presidentes just arrived and being put in the cooler as I type this.

Eat your hearts out.

$2.25 each.

:D

they arent the same as DR pressy's are they?

This has been discussed numerous times on DR1. It is the same Presidente, but there is a slight difference in freshness due to transportation.

[Reel Deal]

Oh...big, important news:

2 cases of Presidentes just arrived and being put in the cooler as I type this.

Eat your hearts out.

$2.25 each.

:D

they arent the same as DR pressy's are they?

This has been discussed numerous times on DR1. It is the same Presidente, but there is a slight difference in freshness due to transportation.DT-they're cold now, just waiting for your reserved place @ the bar. The girls wanna know why you don't love them anymore (you stud...).

[Escort_King]

Oh...big, important news:

2 cases of Presidentes just arrived and being put in the cooler as I type this.

Eat your hearts out.

$2.25 each.

:D

Is that per case? If not then they are a hell of a lot more expensive than Buds in US....

[Escort_King]

Fernandez likes the peso as is
President Leonel Fernandez says that governance in the DR would be affected if the peso depreciates again. The Fernandez government authorities have been keeping money circulation in control in order to maintain the appreciation of the peso. Several economists have said the peso is being manipulated, and this is having a negative effect on Dominican exports, including free zone manufacturing and tourism industry. Costs have not declined in the same proportion as the peso has appreciated. Furthermore, goods and service export price elasticity is much lower than on goods and services sold to the local market. While products sold to the local consumer are doing well, not so those sold abroad.
Finance Minister Vicente Bengoa said that to increase the exchange rate from RD$28 to RD$37, as recently suggested spokesmen for the hotel industry, the government would need to come up with an additional RD$7.88 billion to pay the foreign debt. The foreign debt doubled in the past administration.

The thing of it is the country is supposed to make large payments of their national debt while the exchange rate makes it cheaper to pay.
If they don't and national income decreases because of the lower rates they dig a bigger hole when it moves back up.

Since tourism is its biggest source of revenue - the country needs to make the customers happy... move the rate back and more people come and they spend more.... granted they get a little more... but they are leaving the money in the country which helps further stimulate the economy.

[Mister NYC]

So true...I havent even gone back for 6 weeks now!

[Escort_King]

So true...I havent even gone back for 6 weeks now!

And the tourist trade is hurting because of it!!!!!!!

[JDR]

I came from a client in the US. Their prices were locked in at 40 - $1 last year so the free zone is hurting. The AIs will be slowing down soon as well. The Europeans are coming on charters byt where will they stay?


Something will happen soon. :(

[jd_mine]

The Europeans are coming on charters byt where will they stay?

The Europeans come in on charters and stay at the All-Inn Resorts. So it's the same problem. These package holidays were calculated at 38 pesos to the dollar as well.
Either the package will be more expensive in the new season, which will mean people choosing other destinations, or the peso must be devaluated......

[JDR]

The Europeans are coming on charters byt where will they stay?

The Europeans come in on charters and stay at the All-Inn Resorts. So it's the same problem. These package holidays were calculated at 38 pesos to the dollar as well.
Either the package will be more expensive in the new season, which will mean people choosing other destinations, or the peso must be devaluated......

For $800 Dr is worth it on a 7 day package. For $1,300 you can go to a real Island.

[Reel Deal]

Win you win business based on price, you will eventually lose the business based on price.

That is the essence of a "Whores Market".

If the AI's offered a really, really good product (instead of just a cheap one), currency valuation wouldn't hurt them that much.

It's a classic example of price elasticity/demand. There is a point when the percieved value of a product is less than the price; therefore the consumer quits buying it.

A good example in the NY Giants and Tampa Bay Buccaneers. No matter how expensive tickets to the Giants get, all the games are sold out; the on-field product doesn't matter. When the Bucs sucked in the 80's-early/mid 90's, you couldn't give tickets away at ANY price; the product was that bad.

The DR tourist industry needs something more than marketing their product as "cheap".

It may take a year or two until domestic pricing catches up to the currency revaluation.

This is a Third World country, people. Their problems are way beyond just the currency crisis. The currency crisis exists and has been created by many, many systemic problems which have evolved over many, many years. This recent problem is a symptom, not the problem.

Sometimes that headache is a brain tumor that has been growing for years. You don't treat it with an aspirin.

Even at 27:1, the DR is STILL a great value.

[Tonto4]

Thanks RD for your analysis of so many topics on this board. I appreciate you sharing your expertise.

[Reel Deal]

Oh...big, important news:

2 cases of Presidentes just arrived and being put in the cooler as I type this.

Eat your hearts out.

$2.25 each.

:D

Is that per case? If not then they are a hell of a lot more expensive than Buds in US....I sell Bud and Presidente for the same price @ my bar.

I should charge more for the Presidente, but I have a bias toward anyone who drinks it: we share a love for the same place on the planet (and the semi-sweet chocolate bunnies who live there... :wink: )