Santo Domingo’s Central Bank intervenes to stop run on Dominican Republic’s Peso
At a recent press conference, Central Bank governor Hector Valdez Albizu announced an increase of its benchmark interest rate (monetary policy interest rate) from 4.25% to 6.25% per year. A total of US$200 million will also be injected into the exchange market over the next two weeks in order to stabilize the exchange rate. The Central Bank rate posted on 28 August was RD$43.86 to purchase a US$1 in the bank system.
{IMAGE VIA – hispaniola.com} Valdez Albizu attributed the depreciation of the peso to problems of supply and demand. He said they did not believe that anyone was thinking of holding a knife to their throat, let alone a Dominican and that those betting on the devaluation of the peso would be left with dollars in their hands.
He reiterated that at 5.8%, the depreciation of the Dominican peso was still lower than in other Latin American countries. Brazil’s rate is at almost 20%, Argentina 12.7%, Uruguay 12.3%, Peru 9.3%, Colombia 7.5% and Chile 6.1%.
He said the Central Bank had sufficient funds to intervene in the market until the exchange rate stabilizes.
