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Central Bank says no reason for a change in exchange rate
posted on: Apr 30 2010 8:52 by Royston. Viewed 350 times.
Central Bank Governor, Hector Valdez Albizu, asserted on Wednesday that there are no fiscal or monetary reasons that could justify an increase in the exchange rate, although a powerful construction company recently was authorized to seek U.S. dollars at any price and generated a transient rise.
"I think the holders of currency are making a bad bet wanting to play the exchange rate, considering that the Central Bank has a strong position in foreign reserves, and the backing of the International Monetary Fund," said Valdez Albizu.
This position may be used, if necessary, to intervene in the market, said the governor, but said that, rather than worry about the recent rise in the exchange rate, discussions within the Central Bank focus on how to avoid appreciation of the peso against the U.S. currency with the imminent entry of the resources that come from the sovereign bond placement.
Valdez Albizu held a meeting Wednesday with vice presidents and treasurers of banks to discuss the recent behavior of the exchange rate and was emphatic in stating that there was no tax or monetary reasons for the increase which he defined as transient.
Governor Valdez Albizu stressed that in the past, when there have been sovereign bond issues in the country, the exchange rate has tended to appreciate.
"On those occasions, the Central Bank intervened by buying foreign exchange in the market so that currency appreciation does not affect the foreign exchange generating sectors of the Dominican economy.
In addition, the economy has been benefiting from foreign exchange in the purchase of goods for the reconstruction of Haiti and the improvement in tourist arrivals in the first quarter," he said.
The issue of currency appreciation in emerging economies such as the Dominican, was a topic of discussion at recent meetings of the International Monetary Fund's and the World Bank.
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