How to have income in dollars if you live in Peru

After the storm comes calm. Or so Peruvians feel with the downward trend in the price of the dollar. After having reached all-time highs for the last five months, since a week ago it has begun to fall. There are several factors that explain it: changes in the ministerial cabinet, ratification of the current president of the Central Bank of the Reserve of Peru, changes in the monetary policy of the Federal Reserve of the United States, etc.

But now the million-dollar question is: how long will this situation last, is it a flower of a day or a trend sustained over time? The truth is that changes in currency have had permanent effects within the country as, for example, seventy percent of rents are paid in dollars (before it was fifty), new contracts include clauses that fix the exchange rate and those that are still charged in soles have increased to cover market differences.

The reality is that the dollar has a very fluctuating behavior throughout Latin America. The only countries in the region where it is permanently rising are Argentina and Venezuela, for the rest the price varies depending on monetary policy, rise of different raw materials, calendar of elections for public offices, independence of the issuer (Central Bank) from the executive, etc.

Peru had the price of the dollar controlled until mid-2013. Since that time it has shown a clear upward trend, and despite the small fluctuations they have not altered in any way the constant increase of the US currency. Obviously it is not even close to the situation that Venezuela or Argentina are experiencing.

Although the recession caused by the pandemic wreaked significant havoc on Peruvian GDP during 2020, the economy has managed to recover with a projected growth of 10% for 2021. Experts expect growth of 5 percent for the next five years, demonstrating once again the strength of the economy.

Saving in dollars is not a strange custom in the Inca country. The banking system works with the two currencies in parallel, so it is not uncommon for citizens to acquire debts or open savings accounts with the gringo currency. But the purchasing power in the country is not equal to that of the United States. Nor is the wage level or the size of the economy.

All experts agree that it is not convenient to pass all your savings to dollars. If you have accounts payable in soles, making the respective changes could lose money in the process. Also, the higher the demand, the higher the price. Therefore, you must be prudent when acquiring dollars. And as always, you should define a time horizon for your savings and a purpose with them. It is not the same to save for the payment of debts or to save to make an investment.

It all depends on how it looks, it can be an advantage or a disadvantage. As in Latin America in general, there are several financial products in which you can invest. It also depends on its risk profile and the coverage it offers of inflation. The best thing is that it can be in both currencies. But for professional investors it is not something so attractive: after all they are renting at sun levels and not dollars, the most important thing at the moment.

With the exception of dollar savings accounts (the interest they are paying is almost negative), there are good financial products such as mutual funds, investments in the US stock market (electronic platforms still have a lot of room to grow within the market) or even Bitcoin.

In times of uncertainty it is necessary to resort to the safest options on the market. As for example the real estate market of Miami, Orlando and South Florida. The advantages are obvious: (i) have dollar income from real estate investments at first-world and non-third-world levels; ii) the valuation of properties reaches levels above 10% per year, the geographical proximity of Miami and Peru; (iii) cultural similarity; They make this option the safest and best valued on the market.

In PFS Realty Group given our real estate activity we are focused on advising those individuals and families who are interested in making investments of this type in Miami and South Florida, we have been working for more than twenty (20) years and for this, twenty (20) years that give us a specialty in what we do, If you want to explore real estate investment opportunities, we can schedule a meeting, face-to-face or virtual, to expand this information. Write to us at info@pfsrealty.kinsta.cloud and also visit our www.pfsblog.kinsta.cloud website to learn more about us.