Central Bank says dollar rise is temporary and projects 3.0% growth for 2025

The Central Bank explained about the recent exchange rate movements that there are no macroeconomic elements to explain this greater volatility, beyond the seasonal effect of the month of September for the purchase of inventories before the end-of-year sales, since the activities generating foreign currency have maintained their dynamism, projecting foreign currency income of more than US$46.16 billion for the end of this year. In that sense, foreign direct investment (FDI) is expected to reach US$4.86 billion in 2025, comfortably covering the current account deficit projected for the year. He pointed out that, as a reference, in the 2025 General State Budget, a projection of the average exchange rate for the entire year of RD$63.11 per US dollar was used. Having elapsed the first eight months of the year, the average observed exchange rate was around RD$61.20, so it would be within the budgetary forecasts for the rest of the year 2025. The information came to light after a meeting held by the governor of the Central Bank of the Dominican Republic (BCRD), Héctor Valdez Albizu, accompanied by the Minister of Finance and Economy, Magín Díaz; and the Superintendent of Banks, Alejandro Fernández; with the presidents of the country’s financial sector, whose objective was to review the performance of the national economy and its forecasts, to present the good results shown by the sector, and at the same time to establish a dialogue and collaboration, aimed at preserving macroeconomic stability. The governor stated that “in a context like the current one of high uncertainty and in a turbulent and complex international environment, it is important to proceed with prudence to preserve stability and strengthen the confidence of investors and external and internal economic agents.” Valdez Albizu pointed out that the forecasts are that “the economy will continue to recover gradually during the rest of the year, reaching a growth of around 3.0% in 2025; the pace of economic expansion could accelerate further as a significant boost in public investment materializes and there are spaces to continue easing monetary conditions.” The governor also indicated that this Thursday the Monetary Board will consider the modification of the Exchange Regulation, which was in public consultation for about 30 days. Valdez Albizu highlighted the reductions in bank interest rates following the liquidity measures implemented last May, indicating that the interbank rate of multiple banks is at 8.59%, after reaching 13.19% in that month, for a reduction of 460 basis points (bp); the passive rate went from 9.63% to 7.51% (212 bp less); while the active rate went from 14.99% to 14.19%. Regarding the situation of the financial sector, it was noted that “it remains robust, capitalized, and with high profitability. Indeed, the return on equity (ROE) stood at 21.80% and the return on assets (ROA) at 2.61% in July; while the delinquency rate was 1.9% in June. The solvency ratio stood at 18.39%, higher than the regulatory minimum of 10%.” As the Minister of Finance and Economy, Magín Diaz, stated “the determination of the Dominican Government to combat the slowdown and boost the economy, using an absolute coordination of economic, monetary and fiscal policies, as well as implementing public investment increase allocations.”

For his part, the Superintendent of Banks, Alejandro Fernández, expressed his conviction that “with the monetary measures implemented, interest rates have begun to decrease, which will have a positive impact on the reactivation of private sector credit, which is essential for economic growth”.

The CEO of Banco Popular, Christopher Paniagua, expressed the willingness of the Dominican financial system to “support the efforts of the monetary authorities in maintaining the stability that our country projects in the monetary, economic, fiscal, and exchange rate areas.” For his part, the president of the BHD Financial Center, Luis Molina Achécar, showed his conviction to find solutions, as well as to seek and study ideas together, aimed at meeting the challenges of the future. The governor was accompanied by the vice governor, Clarissa de la Rocha; the manager, Ervin Novas; the general sub-manager, Frank Montaño; the sub-manager of Monetary, Exchange and Financial Policies, Joel Tejeda; the economic advisor to the Governorship, Julio Andújar; the sub-manager of Operations, Liselotte Reyes; the sub-managers of National Accounts, Regulation and Financial Stability, and Monetary Programming, Ramón González, Máximo Rodríguez and Joel González, respectively. In addition, the treasurer, José Perdomo, and the directors Elina Rosario and Carlos Delgado, from National Accounts and Regulation and Financial Stability, respectively, were present.

Representing the financial entities alongside Paniagua and Molina Achécar were Leonardo Aguilera, administrator of BanReservas; Fidelio Despradel – executive president of Banco BHD; Fausto Pimentel, executive president of Banco Santa Cruz; Rocio Velarde, general manager CITIBANK for RD; Víctor Mendez Saba – president of Banco Vimenca; José Rodríguez Copello, president of Banco López de Haro; Juan Rodríguez Copello, executive president of Banco BDI; Edgar del Toro Toral, executive president of Banco Caribe; Juan Carlos Carneiro, executive president Banesco; Andrés Bordas, executive president Banco ADEMI; Gonzalo Gil of Scotiabank; Carlos Julio Camilo, president of Banco Promérica; Luis M. Bogaert Ciaccio- general manager of JMMB Bank; Brian Paniagua- general manager of Banco LAFISE; and Arturo Grullón- executive vice president of Banco Qik.