Over valuation of ttd

[Hance]

For the economists among us ....

Is the TT dollar over-valued in relation to other currencies and also , would a devaluation assist in stimulating the economy via foreign investments etc ?

[discipuli]

over valued?? i have little respect for TTD as it is since i spent a year in barbados , i guess it may be possible due to the amount of TTD in the system but i'd much prefer to see the TTD rise rather than fall against other currencies

[Solachica]

Why ec higher than tt?

[Scorpio]

would a devaluation assist in stimulating the economy via foreign investments etc ?


Me no Economist, but i know that a devasluation will help me buy a house in Tobago:)

[Hance]

I think base on my simple comparisons the cost of living in Trinidad is not very low compare to the rest of world ( we are not very high either) . For example here in Ethiopia you can spend the equivalent of 20TTD a week and obtain all your vegetables....to give an idea, a pound of potatoes is roughly 0.75 TTD and a pound of tomatoes is about 1 TTD, and you are purchasing these items in a high end supermarket...it is even cheaper in the outdoor markets.

[lexbarker]

If government is printing too much and inflation is high then it is devalued (reduction in buying power). Usually devaluation, stable government, social stability etc. will attrack foreign investors but the TT dollar cannot go down too much otherwise it may go in the direction of Zimbabwe.

[Scorpio]

Just tell me when de TT dollar devalue .... ah manage to save up a few likkle US Dollars and I might be able to benefit. :)

[mammadon]

For the economists among us ....

Is the TT dollar over-valued in relation to other currencies and also , would a devaluation assist in stimulating the economy via foreign investments etc ?

It depends.

Trini's main exports are in the energy sector/fossil fuels. the price of oil and gas would be main factors, which in turn are influenced by global supply and demand.

I think the best bet in attracting foreign investment is the regulatory environment, as well as external/international marketing of the country as a good place for investment. Infrastructure, communications links, etc. are also important here. We are generally politically stable, have no tensions in the country (apart from the crime situation) and in a Caribbean context have good roads, telecommunications and ting.

Besides, I'm not sure what affect changing the peg to the US dollar would have on the economy. My own opinion is that floating rates are best, and just use monetary policy to fine tune the economy.

[Redman]

We have a dirty float so that the CBTT exercises control over the level the TTD trades at vs the USD- since we are pegged against the US -weakness in that currency has in fact devalued the TT against other currencies.

A Devaluation will not really inspire confidence for FDI - when you see 1 roach you know that there are 100s you aint seeing- so it will frighten off more $$ that it will attract

What will attract Investors is stability, as mammathedon stated -devaluation indicates instability.


Later

[lexbarker]

Just tell me when de TT dollar devalue .... ah manage to save up a few likkle US Dollars and I might be able to benefit. :)

Since it is pegged with the US your exchange will always be the same but the buying power is down for food, housing etc., the effects of inflation.

[Hance]

Read this post in the Trinidad Express 29/10/2010. What do the economists amongst us think ??Story Created: Oct 28, 2010 at 11:39 PM ECT

(Story Updated: Oct 28, 2010 at 11:39 PM ECT )

PUBLIC servants, university lecturers and other workers protesting... Clico depositors up in arms about the bailout offer... Government has no money to pay... What to do?

I will give Winston Dookeran some free advice.

Give the people who are protesting so vociferously a bigger increase or better package. But how are we to raise the revenue to pay for this?

Elementary, my dear Mr Dookeran. Let the T&T dollar float. The Government will not have to pump billions of dollars into the Central Bank to maintain the exchange rate. The T&T dollar will fall against the US and we will receive more revenue from our oil and gas exports.

Patrick Manning credited the floating of the T&T currency for the economic recovery in the 1990s. Well we certainly need an economic recovery now. If we have a floating currency, we should let it float, as the People's National Movement should have done if it really believed what it was saying.

So let people continue with their protests. Do they think the PNM would have given them more? The offers they are getting were on the table before the People's Partnership came into government.

Even if the PNM gave them more, it would have done so by borrowing money, leading the country into the valley of debt. The systemic risk of governments failing is much worse than that of financial institutions failing.

Charles de Matas

[oecarb]

Just tell me when de TT dollar devalue .... ah manage to save up a few likkle US Dollars and I might be able to benefit. :)

If the TT dollar is devalued, so would your US dollars. So no benefit unless you have some other currency that dont depend on the US dollar. Or gold etc.

[Redman]

If the TT dollar is devalued, so would your US dollars. So no benefit unless you have some other currency that dont depend on the US dollar. Or gold etc.

Oecarb-can you explain how the TT devaluation impacts the value of the USD?
Thanks

Later

[shield_2006]

DE Matas on to a real quick fix they--except--Trinis--all ah dem --not ready for a roll back in living standards just yet.da is d problem with that idea.

[oecarb]

Oecarb-can you explain how the TT devaluation impacts the value of the USD?
Thanks

Later

Redman, what I meant was that the TT dollar is pegged to the US dollar. Like you said earlier, the TT dollar is devalued (against every currency but the US dollar) every time the US dollar falls; so they will always move in tandem unless the GOTT drops the link with the US dollar and devalues independently.

[Hance]

The Central Governor said yesterday to expect more fluctuation between the USD and TTD from now on.....it appears to be "fluctuating" only one way.....a slow devaluation on the float.....I seriously doubt the USD will go back to the days of 6.22 to 1

The government is saying not to worry about USD forex, but if you go to the bank over the counter you still cannot get USD easily

I am interested to hear some comments with respect to this situation

[BW]

The Central Governor said yesterday to expect more fluctuation between the USD and TTD from now on.....it appears to be "fluctuating" only one way.....a slow devaluation on the float.....I seriously doubt the USD will go back to the days of 6.22 to 1

The government is saying not to worry about USD forex, but if you go to the bank over the counter you still cannot get USD easily

I am interested to hear some comments with respect to this situation

I guess my thread wasn't good enough :(

http://www.ttonline.org/threads/11671-Devaluation-on-the-cards