Just looking for opinions from people smarter than me!
Out of curiosity, with the free fall of the US dollar (I know it fluctuates constantly) compared to other world currency does this affect the future equal exchange of the BZ 2 =US 1 staying the same? This came to mind because for the first time I can remember the Canadian dollar is worth more than the US dollar.
I guess my question is, does anyone think Belize will ever go to a floating exchange rate?

Not a chance, in the near fiture.

If it did it would plummet against even a heavily undervalued dollar. I seem to remember someone calculating once that a true exchange rate should be something like 1 Bz$ = 0.03 US$

So a house that is now US$150,000 would be worth only US$9,000??? Bull S--t!!!

Property transactions are completed in USD, not BZD.

Check the math...

No math to check. Regardless of the value of the belize dollar, real estate transactions are in USD so are unaffected whatever the exchange rate. A valuation is set by the amount and currency of tender. Not the other way around.

Heh, heh...better hope it never happens...you will get a BIG surprise!!!

ok. Let me try to explain better...

Today, let's say a lot in Belize is going for $100,000 USD. Today that is worth $200,000 BZD. If the value of the BZD drops by 50%, that would move the exchange from 2 to 1 to 3 to 1. If that happens then the same property which was purchased for $100,000 USD would now be worth 300,000 BZD. Because property is traded in USD, the worsening BZD seemingly made the value of the property increase, though it really didn't effect the value either way.

Now let’s take into account the economic impact that of a weaker BZD using the above scenario of a move from 2 to 1 to 3 to 1. A weaker dollar almost always attracts tourism from countries with stronger dollars. Why? …because it is now a dirt cheap place to visit. Canada border towns used to see this effect from the United States and the US is now seeing the effect from Europe. Wouldn’t you like a 50% discount on every hotel, restaurant, airplane ticket and cab ride?

Since Belize’s economy is hugely affected by the tourist dollar, with more tourists comes a stronger economy. That BZD would almost certainly rebound… so what happens to the property value when the BZD gets stronger.

Let's say the BZD rebounds back to its original 2 to 1. Did you lose $100,000 BZD in the value of the property you purchased? You might think so since when you originally spent $100,000 it was equal to $300,000 BZD but that same $100,000 is now only worth $200,000 BZD. However, regardless of the value of the Belize dollar, since property is traded in USD, the value of your property is still $100,000 USD, plus or minus the effect the economy has had on whatever you could sell the property for now. With all the new tourists that have found out about our lovely island, your property would be an easy sell at a hefty profit.

What would be a problem is if when they unlocked the BZD from the USD, they also converted to trading property in BZD. Then I'm with you 100%.

Whoever would unlock the BZ$ from the US$ would be committing political suicide in Belize. Originally the BZ$ was equal to the US$ there was a lot of unrest in Belize when it was devalued.

I think also our economy is too small for an independent currency. Another option would be to let go of the Belize Dollar and use the US dollar, like El Salvador.

In discussions a few years back I remember that the real value of the Belize Dollar was estimated between 33 and 10 cents US, thus US$ 1 being between 3-10 Belize. IMO the devaluation of the US Dollar helped to get the Belize Dollar's real value level with the official value.

What this country needs right now is the new runway being opened and receiving flights from Europe. Both the Euro and Sterling are much stronger against the US$ than they used to be, and with a sensible way to get here we should see a big influx of relatively wealthy Europeans, just in time to counter the fall off in American spending.

I see almost no advantage to Belize to de-pegging the dollah from the dollar.

Belize has a large trade annual trade deficit (it imports much more than it exports) and a large external debt. Its economy is tiny, and it has few exportable natural resources except a little bit of oil.

Devaluations (in effect that's what depegging likely would mean) generally only benefit countries that have the potential to be big exporters.

Large purchases such as real estate and most hotel rates are already denominated in U.S. dollars.

The impact of a depegging likely would be a major increase in inflation due to the immediately higher cost of importing food and most consumer items. As mentioned, this would cause a lot of political problems in Belize.

This all assumes that the Belize dollar would fall in value against harder currencies such as the U.S. dollar and against regional currrencies such as the Mexican peso.

There's a small chance that it wouldn't -- for example the U.S. dollar is so weak now that even the Costa Rican colon has recently risen against it, as have almost all South American currencies except those pegged to the dollar.

But, barring a dramatic change in Belize's economic fortunes, that's unlikely to happen. And if it did, the impact on U.S. tourism to Belize of course would be negative. It would raise the cost of visiting Belize for U.S. visitors, who currently make up about 70% of its tourism source market.

So, it is a lose-lose situation to depeg the Belize dollar.

As noted, a better option probably would be to do what Ecuador and El Salvador and many small Caribbean nations have done, which is to replace the local currency with the U.S. dollar. That would save Belize a lot in the high cost of its Central Bank offices and bureaucracy.

--Lan Sluder

For the record, I was not advocating the switch... just pointing out that it wouldn't necessarily affect property values as it was suggested.

The Central Bank may have a problem with Belize land and products being valued in a foreign currency.

It already is.

Agreed.