Valdez Albizu: exchange rate will close the year below RD$ 38

The Governor of the Central Bank, Héctor Valdez Albizu, yesterday highlighted the macroeconomic stability which enjoys Dominican Republic and pointed out that the year ends the Government is going to save US$ 1 on the exchange rate projected in the national budget, since he considered a value of RD$ 39.50 and will be completed in the year with Exchange rate of RD$ 38.50

Valdez Albizu emphasized that it is not possible to live with an anchor exchange rate and stressed that in this country when this happens they say that there are financial dam and when it moves to balance foreign trade (imports and exports) say that they are accelerating, and this is not true, because inflation is around 7.5% in September, annualized is less than 9% and the growth of the exchange rate is less than 3%.

The official stressed that it is not possible to live anchored as either deliberately encouraging the rate change, but expect dynamic the economy's movement

Said u000athat the 2011 budget provides a rate of RD$ 39.50 to el and an average of RD$ 39.00, "and we will finish this year with an average below RD$ 38.00, which means that for every transaction in currency foreign that the Government is doing in terms of average will be earning the equivalent of a dollar", which are RD$ 38.50 ".

Pointed out that anyone who wants to enjoy on the exchange rate subject to enjoy, but what it says is that there are no economic crisis and that it is only in the minds of people who would like to than the has

Argued that both the Government and the opposition should be thinking not to create negative expectations, nor aprensiones the population of what will happen, "if it doesn't exist, her look not for where there is no".

Recalled that last year the Government deposited $750 million of the sovereign bonds in the CB, who was using to the extent of their needs, which explains an excessive deposits of the Government, u000anot a loss of reserves, because all the quarters Bank Centralo has exceeded the targets set with the International Monetary Fund (IMF) between US$ 200 and 250 million.

Reiterated that in September the CB reserves closed over $220 million of the targets with the IMF, "which is the objective of the Bank".

New methodology will
the Central Bank of Dominican Republic change, from 2012, its methodology for measuring the pattern of inflation, so it now will be measured annual rates of monetary aggregates (M1, M2, and M3) to explicit inflation targets, "in line with the Constitution of the Republic and with the monetary and financial law 83-02". The M1 is the amount of money in the hands of the public, the M2 is the circulating medium (M1 over the quasi-fiscal).

The Governor of the Central Bank noted that this measure forms part of the commitment assumed Covenant Stand by signed in 2009 with the International Monetary Fund u000aInternational (IMF) and the same applies in 27 central banks of other nations of Latin America, where Chile was a pioneer and has been followed in Mexico, Colombia, Peru and Guatemala.

Valdez Albizu said, speaking at the opening workshop "Scheme targets" inflation, taught journalists from the economic area as part of the educational programme of the entity that the pattern of inflation-targeting is important because it allows you to create a climate of certainty to the industry on what will be the price movement.

Said that price stability, macroeconomic, giving security and strength economic spectrum for decision-making. He reiterated that there is no economic crisis in RD, but that there are problems that are secular (at the time, more than 20 years).

Inflation targets are known as "inflation targeting".

Valdez Albizu said that since 2005 the monetary entity has been assuming gradually this u000aschema, "which tends to anchor expectations of actors of the market on that specific goal" and is consistent with the modern central banking.

The workshop was attended by economists Joel Tejeda, July Andujar and Fran sources, as well as the Uruguayan economist and consultant to communications on matters economic, Álvaro Pérez.

According to data from the BC as a result of macroeconomic expectations of analysts of the private sector and academics survey inflation expectations are 8.4% this month, in an exchange rate of RD$ 39.11, a growth of 4.3 per cent for the year, and a rate of 7% monetary.

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Six countries are addressing to that new schema
currently, there are six countries of the region in transition to the inflation targets scheme (EMI) that are Costa Rica, Uruguay, Dominican Republic and Paraguay.

From the scheme targets inflation will come out monetary policy releases u000amonetary policy report, survey of macroeconomic expectations, financial stability report, economic research and monetary program targets inflation.

According to data from the Central Bank as a result of surveys of macroeconomic expectations of analysts of the private sector and academic inflation expectations are 8.4 per cent this month, in an exchange rate of RD$ 39.11, a growth of the gross domestic product (GDP) of 4.3 per cent for the year, and a monetary policy of 7 per cent rate.

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