The Dominican peso has started the year with a strong strengthening trend, reflecting an appreciation of 2.2 percent against the dollar.
Statistics from the Central Bank reflect that the Dominican foreign exchange market exhibits a strong strengthening so far in 2022, with the dollar trading at 56.8261 equivalent to a year-on-year appreciation of 2.2%.
This performance is attributed to a combination of factors, which leads the application of a more restrictive monetary policy to face inflationary pressures from external factors, which has led to an increase in the Central Bank’s monetary policy rate (MPR) by 200 basis points. from November 2021 to date.
Another important factor in this favorable exchange performance has been the decrease in the money supply, as a result of open market operations through the placement of Fixed Income Notes and Central Bank Bills.
In addition, the participation of the Central Bank through the Foreign Exchange Trading Platform has also contributed to the appreciation of the Dominican peso. This platform has contributed to dealing with periods of relative volatility in the exchange rate.
The behavior with growing contributions from the foreign exchange generating sectors has played an important role in propitiating the favorable exchange position. Importantly, the continuous performance of the foreign exchange generating sectors that continue to maintain supply flows in the foreign exchange market from a thriving export sector, remittances and Foreign Direct Investment (FDI) is cited.
Likewise, “the successful placement of sovereign bonds of the Dominican government in international markets” is added to the favorable exchange scenario, which “will result in even better performance of the exchange market in the months to come.”
The revaluation experienced by the national currency breaks a performance of traditional devaluation at the beginning of the year, when between January and February the demand for foreign currency in the market traditionally rises, for importers to pay for purchases at the end of the year.
Currently the dollar presents the sales price at 56.8261 and purchases at 56.5551, according to statistics from the Central Bank.
This scenario will necessarily contribute to downward pressure on inflation levels, which have remained above the higher levels projected in the goals of the monetary authorities for the year 2022.