Dollar falls on US$200M injection, spurs interest rate jitters

Santo Domingo.- Central banker Hector Valdez Albizu on Wednesday said interest rates could climb as the Banks Association (ABA) warned Tuesday, after the announced injection of dollars to brake its upward spiral.

The official said however that despite a possible 1or 2 point climb of the interest rate, "it’s less harmful, less perverse and less damaging than if the exchange rate climbs to a level that cannot be reached afterward."

"We’ve made our calculations, and believe the effect would still be less damaging to the population, society, for operators and those who live on a wage, the exchange rate doesn’t get to the 100 points above last year, than if the interest rate moves 1 or 2 points," Valdez said after laying a wreath at the National Altar to mark Independence Day activities.

The Central Bank’s announced injection of up to US$200 million into the exchange market has already had en effect, though very slight, with Wednesday’s exchange rate at RD$44.97 per dollar, compared with Tuesday’s RD$44.99 per dollar, according to a its poll.