The Central Bank holds the peso steady, regarding the dollar.
Santo Domingo.- Dominican Republic’s former representative before the International Monetary Fund (IMF) called "hairbrained" the proposal to let the exchange rate slide to improve the companies’ competitiveness, increase exports and reduce the trade deficit at this time.
Ruddy Santana said the Central Bank in fact implemented a devaluation process in the previous Administration to respond to a recession in the U.S. and to stimulate exports, whose result was a "total catastrophe," since the slide of the exchange rate "induced inflation, the economy’s dollarization, flight of capitals and the loss of US$500 million in international reserves."
He said in the present conjuncture the required devaluation of the peso to make exports competitive would be of such magnitude that it would lead to even more detrimental results than those which took place in 2003. "The foreign debt would increase to the point of leading the country into default, power plants would have to shut down and it would be impossible for the government to confront the current food crisis."
Santana said the Central Bank manages the liquidity according to the financial system’s requirements.
Written by: Lautaro, 17 Jul 2008 9:45 AM
From: Brazil, near Copacabana
To let the rate slide would be akin to committing economic suicide, seeing as how our supermarkets, colmados and other businesses are killing us with their speculative inclinations, and how the consummer is treated worse than a dog on a puddle of mud.
Written by: anthonyC, 17 Jul 2008 9:47 AM
From: United States
Artificially maintaining the Peso at the current rate would be worse.
Written by: Lautaro, 17 Jul 2008 9:48 AM
From: Brazil, near Copacabana
Easy for you to say it, when you're not suffering the things that I mentioned above directly. How would you sell the idea to the common citizen, who have to make ends meet at the end of each month, may I ask, mr. genius?
Written by: BLANCO, 17 Jul 2008 10:11 AM
From: Dominican Republic
as the peso is not convertible to anything on the open market. the central bank can set any exchange rate they want to fit into the economics of the country. if you were here in 2003 it was chaos. tourist were happy getting 45 to 1 but they were here for only two weeks.
the choas was never rectified and the prices we see today ar those of 2003
the only winners of the 2003 crisis were the holders of dollars, who overnight became "peso millioners"
leave it alone
Written by: Lautaro, 17 Jul 2008 10:12 AM
From: Brazil, near Copacabana
My thoughts exactly, mr. Blanco.
From: Dominican Republic
The artificially high rate has created a fool's paradise.Sooner or later reality must be faced and those who fail to understand this, are going to really get hurt when the house of cards that Leonel has built comes tumbling down.He can postpone this collapse but he can't prevent it.While the 2003 devaluation hurt, it would have been better to let things settle down and correct.The next devaluation, and it is coming, will be harder on everyone because he has put us in a "box of taxes" with no way out.His free trade initiative lets in cheaper goods, relatively free of taxes yet because of our abandoned infrastructure especially roads and electricity the goods we produce cannot compete. If we had a solid infrastructure, that is where we would find the savings we now need. Instead the unfortunate only way is through currency devaluation.This is bad tasting medicine so hold your nose.I will move my pesos to dollars.Read our history.Protect yourself. If nothing happens what have you lost?
From: United States Virgin Islands, Christiansted.from the bar at the Comanche
Devaluation is coming and it will be no day at the beach it is inevitable
Written by: Euromax, 17 Jul 2008 1:01 PM
From: Dominican Republic, Bona, The holy land of the west
we need to change for the EURO and fast! the dollar is declining very much...
Written by: Escott, 17 Jul 2008 1:02 PM
From: Dominican Republic, Sosua/Cabrera
Laufaro and Blanco
ok guys, lets talk about this. I was living here when the peso was 16 to 1 and went to 52 to 1 so I have the experience to discuss this. I am not a tourist and live here.
I am a simple guy so explain to me why a six of presidente was 153 pesos when the dollar was at 52 to 1 and now that the dollar is 34 to 1 the six costs 280 pesos in the same store. Tell me HOW this is better for me because I can't figure it out. I still make the same money that I did before. I know I am just an alcoholic and mostly only know the price of alcohol but how about the price of Yuca and Plantano also which has gotten even MORE Expensive than beer.
The dollar goes up exports go up. At least there is some good for some one there. This crooked government manipulates the exchange rates to screw people and steal more money. Supply and demand actually works given the chance.
Enlighten me how paying more benifits me. Please!
Written by: Escott, 17 Jul 2008 1:09 PM
From: Dominican Republic, Sosua/Cabrera
Change from the dollar to Euro? Sounds like a winner. Stick with the dollar till it bottoms out and then switch to the next falling currency:)
Silly me thought we used Dominican Pesos here anyway.
Written by: BLANCO, 17 Jul 2008 1:25 PM
From: Dominican Republic
escott you answered your own question
From: Dominican Republic
The simultanious devaluation of the Dollar AND the artificial support of the Peso by the government becomes "Quid Pro Quo" in the circumstances.
Price increases that took place during the 2000-2004 financial debacle are still with us. Businesses HAVE NOT lowered their prices to adjust for the downward trend of dollar/peso exchange rate from that of the 45-50/1 ratio we experienced during the timeframe cited. Remember the rate dropping to 25/1 shortly after Leonel took office. The rate is now again creeping upward, being 34/1 today.
The subsequent taxation of the basic FOOD BASKET, by including it in the overal ITIBIS has had an adverse effect on those prices paid by the consumer. Where SOME of the taxes were reduced/eliminated on certain items, the increased price (from taxes) still prevails.
The reluctance of the businesses to reduce their prices in adjustment to the exchange rate is the real culprit. Also, those few extra centavos you pay per unit add up fast.
Go figure.
TB
From: Dominican Republic
So, what it all adds up to is the fact that the inherent freed of the businesses, in conjuction with the obvious greed of the government are the culprits that keep prices high without regard to any preplanned margin of profit necessary to maintain inventory and a reasonable return on investment.
What has happened is that both entities have become accustomed to increase in income and just don't want to back off the pinnacle.
TB
Written by: Rainman, 17 Jul 2008 3:34 PM
From: United States
Maintaining an artificial value to a currency regardless of the country goes against any free market doctrine. The peso as well as the dollar should fluctuate according to the demand and supply and the economic conditions existing in the country at any given moment. No government can stand the freezing of its currency for long, doing such will only expedite economic colapse and fleeing of foreing capital creating an unstable economic enviroment afecting the locals in the worst manner.
From: United States, New York City
Too hell with doctrine and dogma, letting a currency float freely is too dangerous. I'm not saying pro/con as to whether there should be a devaluation in this case as I don't know enough of the facts and DT.com articles do not give much other than broad picture and a quote. Nonetheless a completely free float can be a scary thing. Also it seems to me rational that business owners would not drop prices. If the relief in the exchange rates came by way of government manipulation then the currency remains as weak as before. Also fact is US dollar is worth less so DR peso should strengthen some against it even outside gov manipulation. Someone suggested getting into Euros, but fishy biz may be afoot there as well once different regions begin diverging in the interest rates they want. British pound remains king :P
From: United States
Take all the economists in the world .. join them end-to-end .. and they still never reach a conclusion .. this is turning out to be more complex than meets the eye .. I am a simple guy too .. why is it costing me more and more to get drunk less and less on Presidente beer?
From: United States Virgin Islands, Christiansted.from the bar at the Comanche
Switch to Bhrama it costs less
From: Puerto Rico
The scheme that the dominica government has utilized for the past 4 years, that of "pegging" the exchange rate, irrationally so, to the dollar has certainly had a therapeutic effect on the stabilizationof the economy. The same cannot be said for the effect that this "therapy" has had on the most important producers of foreign direct investment for the DR; the tourism industry and the foreign remmittances by dominican nationals living in the US.
The tourism industry was hard hit by this move and so were hundreds of thousands of dominican families whose homes depended, to a great extent on the influx of monies from those relatives who sent their hard earned dollars to them. Tourists and Tourism received less for their efforts and as a result spent less time on the DR. The statistics show only the rise of tourism from mostly european countries (most EU tourists that go to the DR save for a long ti before being able to take their "sardine can" trip - i.e. they are cheap - (continued)
From: United States Virgin Islands, Christiansted.from the bar at the Comanche
Dominica is a small beautiful island in the lesser Antilles
From: United States
Isn't double digit inflation enough? If dollar is allowed to float then we'll be going back to Hipolito's dark era.
From: Puerto Rico
On the other hand, American tourists are repetitive tourists. Most of which frequent the DR on many occasions during a year (like me)
The Dominican Government need only exert pressure on the different segments pf the economy who exert undue pressure on the population through their specuative handling of goods exchanged for usury profits. The problem here is that those entities have such a strong hold on the government and their representatives that there are few (if any) members of the same willing to lay down a fair economics practice law that benefits the countries population as a whole, not just a few.
By all means, the exchange rate in the DR right now should be in the 42 - 45 DOP to the Dollar .
From: United States Virgin Islands, Christiansted.from the bar at the Comanche
You mean a devalued peso and even more stealing Saturn ?
From: United States
I tried Brahma .. nice looking gal in the ads .. but I can't stand the taste .. Presidente tastes much better .. so I always "Hop" back to Presidente because I can "Barley" stand the taste of Brahma .. in fact Presidente tastes better than any commercial US beer I know .. other than a Microbrew beer .. Canadian beers taste much better than US beers .. Bud might taste better after the InBev takeover .. I hope .. after all the BrewHaha settles ..
From: United States Virgin Islands, Christiansted.from the bar at the Comanche
Jeanarenas I dont know.....but the number but 34 sux to use economists nomenclature
From: United States Virgin Islands, Christiansted.from the bar at the Comanche
Hippo that was the dark side it does not get any darker
From: United States
I just read the IMF "global economic forecast" .. now I am really confused .. I need another Presidente "Jumbo" .. this depressing situation is going to last well into 2009 .. Marx .. Smith .. Marshall .. Keynes .. Friedman .. Greenspan .. Bernanke .. the "big brains" of economic science all tried to explain these business cycles .. volumes were written but nothing has changed ..we still have these "swings" .. ups and downs.. disequilibria .. nothing has changed .. it's like a roller coaster .. like death and taxes .. Greenspan predicted "stagflation" .. inflation with economic stagnation .. it's like being a sitting duck .. you just sit there and take it on the nose .. now that's just great .. time for more cerveza .. another Jumbo ..
From: United States
This is whats been happening. First the IMF needs and wants to keep its present position in D.R. as it has in other places. Second the placing of fears in the general pop[ulations that has no ideas or know how about economics realities. Say a word and let it ride from there -- the word is " CRISIS " and now add the word " FOOD ". This so called crisis has not devaluated the pesos cause its at the same level that it has been for the past couple of years and longer ( since after the PRD, which made a lot of PRD more rich, thanks to the PLD ). If you understand this than you know a little more. The peso is not going to devaluate cause there's no crisis and cause the dollar has also devaluated in competition with the EURO. So what this is saying is that as long as the EURO maintains its presnt streangh the likelyhood is that the peso will remained as it is in comparison to the dollar. The IMF wants to keep its grasps and choke D.R -- they are thieves that exploit and exploit.
Written by: Jander, 18 Jul 2008 2:00 AM
From: Dominican Republic
EC dollar Eastern Caribbean Currency has been pegged to the United States dollar at US$1 = EC$2.7 since 1976.
My point is why should the peso be devaluated at all . Just more bloody speculation and another way to screw anyone who invests in this country or the $ RDP
From: United States Virgin Islands, Christiansted.from the bar at the Comanche
Harebrained.... Foolish; flighty: a harebrained scheme.
Usage Note: The first use of harebrained dates to 1548. The spelling hairbrained also has a long history, going back to the 1500s when hair was a variant spelling of hare. The hair variant was preserved in Scotland into the 18th century, and as a result it is impossible to tell exactly when people began writing hairbrained in the belief that the word means "having a hair-sized brain" rather than "with no more sense than a hare." While hairbrained continues to be used and confused, it should be avoided in favor of harebrained which has been established as the correct spelling.
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the choas was never rectified and the prices we see today ar those of 2003
the only winners of the 2003 crisis were the holders of dollars, who overnight became "peso millioners"
leave it alone
ok guys, lets talk about this. I was living here when the peso was 16 to 1 and went to 52 to 1 so I have the experience to discuss this. I am not a tourist and live here.
I am a simple guy so explain to me why a six of presidente was 153 pesos when the dollar was at 52 to 1 and now that the dollar is 34 to 1 the six costs 280 pesos in the same store. Tell me HOW this is better for me because I can't figure it out. I still make the same money that I did before. I know I am just an alcoholic and mostly only know the price of alcohol but how about the price of Yuca and Plantano also which has gotten even MORE Expensive than beer.
The dollar goes up exports go up. At least there is some good for some one there. This crooked government manipulates the exchange rates to screw people and steal more money. Supply and demand actually works given the chance.
Enlighten me how paying more benifits me. Please!
Silly me thought we used Dominican Pesos here anyway.
Price increases that took place during the 2000-2004 financial debacle are still with us. Businesses HAVE NOT lowered their prices to adjust for the downward trend of dollar/peso exchange rate from that of the 45-50/1 ratio we experienced during the timeframe cited. Remember the rate dropping to 25/1 shortly after Leonel took office. The rate is now again creeping upward, being 34/1 today.
The subsequent taxation of the basic FOOD BASKET, by including it in the overal ITIBIS has had an adverse effect on those prices paid by the consumer. Where SOME of the taxes were reduced/eliminated on certain items, the increased price (from taxes) still prevails.
The reluctance of the businesses to reduce their prices in adjustment to the exchange rate is the real culprit. Also, those few extra centavos you pay per unit add up fast.
Go figure.
TB
What has happened is that both entities have become accustomed to increase in income and just don't want to back off the pinnacle.
TB
The tourism industry was hard hit by this move and so were hundreds of thousands of dominican families whose homes depended, to a great extent on the influx of monies from those relatives who sent their hard earned dollars to them. Tourists and Tourism received less for their efforts and as a result spent less time on the DR. The statistics show only the rise of tourism from mostly european countries (most EU tourists that go to the DR save for a long ti before being able to take their "sardine can" trip - i.e. they are cheap - (continued)
The Dominican Government need only exert pressure on the different segments pf the economy who exert undue pressure on the population through their specuative handling of goods exchanged for usury profits. The problem here is that those entities have such a strong hold on the government and their representatives that there are few (if any) members of the same willing to lay down a fair economics practice law that benefits the countries population as a whole, not just a few.
By all means, the exchange rate in the DR right now should be in the 42 - 45 DOP to the Dollar .
My point is why should the peso be devaluated at all . Just more bloody speculation and another way to screw anyone who invests in this country or the $ RDP
Usage Note: The first use of harebrained dates to 1548. The spelling hairbrained also has a long history, going back to the 1500s when hair was a variant spelling of hare. The hair variant was preserved in Scotland into the 18th century, and as a result it is impossible to tell exactly when people began writing hairbrained in the belief that the word means "having a hair-sized brain" rather than "with no more sense than a hare." While hairbrained continues to be used and confused, it should be avoided in favor of harebrained which has been established as the correct spelling.