Is there a risk of an exchange rate crisis of the dollar and the peso in the Dominican Republic?
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Economist Magín Díaz said Friday that there is no risk of an exchange rate crisis because the Central Bank has 15 billion in reserves and has credibility.
“Hector Valdez Albizu comes out one day and says “this is not going to move,” and it is not going to move because he controls expectations,” he explained.
Diaz, former head of the General Directorate of Internal Taxes, understands that the Central Bank manages the dollar situation in the country.
“There is never a shortage; if you go and look for it, there is always a price at which it is sold at a higher price now the Central Bank, with the exchange rate what it does is that it tries to make the price move slowly,” he said.
The expert revealed that “the Dominican economy grew the same as the average of Latin America, in the last 30 years, let’s say we grew twice as much. Now, it is the lowest growth in 30 years or so.”
He maintained that the country’s finances are robust because “in a bad year, we grow equal to the average.”
“The Government made a reformulated complementary budget where it increased the deficit to 221 billion pesos, but the preliminary results indicate a deficit close to 210 billion pesos, that is to say, a little less than the complementary budget,” he said.
Regarding the rate increase for this year, he indicated that the Central Bank had lowered the reference rate and given liquidity to the banks so that they could lend at fixed rates for a couple of years at a lower rate than they were. The rates here could decrease more if the United States lowers its rate.
These statements were made on the El Sol de la Mañana program, broadcast on Zol 106.5 FM.
The last notice I have is DR operates under floating exchange rate concept. The market establishes the rate.
A floating exchange rate is an exchange rate system where a country’s currency price is determined by the foreign exchange market, depending on the relative supply and demand of other currencies. A floating exchange rate is not restrained by trade limits or government controls, unlike a fixed exchange rate.
So for any enity to impact the rate they would have to inject a credable amount of currency into the system
Central Bank does not establish the exchange rate
This is doublespeak, what this guy is saying; does anybody understand it?
Simply put, the deficit is one year’s debt made by the government. The debt is the total of all deficits. The government continues to borrow from the Central bank, and that is why the peso drops vs the US dollar (and against goods as it buys less).
DR’s has a floating exchange rate that is established by the market. Not by any dominican public agency
Dominican government agency