Local January 18, 2025 | 10:00 am

“So far there is no concern about the dollar rate”

Currently, the Central Bank’s (CB) international reserves (US$13,387.6 million) are higher than the International Monetary Fund’s (IMF) recommendation of setting the satisfactory level of reserves at 10% of gross domestic product (GDP). With the projection of new records in foreign exchange generation, the BC will be able to handle very easily any exchange rate pressure that would eventually occur in 2025.

Economist Henri Hebrard offered this information yesterday when he analyzed the dollar rate’s behavior, so he understands that, in essence, there is no reason for concern for this year.

Citing data from the authorities, it specifies that according to the 2025 budget approved last month in the National Congress, an average exchange rate of RD$63.11 is projected, equivalent to an appreciation of the dollar against the peso of +5.50%.

“The 2025 budget projected an average exchange rate of RD$59.82 for 2024, and it was finally lower since it closed at RD$59.56,” he said.

Hebrard specifies that taking into account that the foreign exchange-generating sectors will continue to break new records in 2025, with an anticipated rise of the dollar lower than what has been projected in the 2025 budget, it is expected that tourism revenues, after closing 2023 at US$9,751 million and having closed 2024 at around US$10,600 million, they would exceed US$11,000 million in 2025, while exports from free zones, he said, after closing 2023 at US$7,965 million and having closed 2024 at around US$8,600 million, would exceed US$9,000 million this year.

“So we project an average value of the dollar between RD$62.00 and RD$62.50 for the year 2025 (significantly lower than the RD$63.11 of the official budget), that is, a rate of appreciation of the US$ between +4.1% and +4.9%,” he added.

He said that it is essential to point out that an important element when analyzing the dollar-peso parity is that you cannot only look at the Dominican side but also see the new dollar reality.

“Due to the return of Donald Trump, since the November 2024 elections, the dollar has risen very significantly against the main international currencies. To take an example, in the case of the Euro, while it was trading at US$1.0934 on November 6, the currency has dropped to just US$1.0281 today (yesterday), that is, the dollar appreciated +6.35% since Trump’s victory. If it had risen in the same proportion against the peso, the peso should be quoted at RD$64.07.”

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Jay Hansen
January 19, 2025 6:40 pm

Give it a week or two.