{"id":521140,"date":"2026-08-12T16:42:07","date_gmt":"2026-08-12T20:42:07","guid":{"rendered":"https:\/\/deultimominuto.net\/en\/uncategorized\/recent-exchange-rate-dynamics-and-the-inflation-targeting-framework\/"},"modified":"2026-08-12T16:42:07","modified_gmt":"2026-08-12T20:42:07","slug":"recent-exchange-rate-dynamics-and-the-inflation-targeting-framework","status":"publish","type":"post","link":"https:\/\/deultimominuto.com\/en\/economy\/recent-exchange-rate-dynamics-and-the-inflation-targeting-framework\/","title":{"rendered":"Recent exchange rate dynamics and the inflation targeting framework"},"content":{"rendered":"\n

With the interest of keeping economic agents and the general public duly informed, and taking into account the recent debate in the media regarding the behavior<\/a> of the exchange rate, the Central Bank of the Dominican Republic (BCRD) presents some considerations on the exchange rate policy of a central bank operating under an inflation targeting framework (ITF), in view of the recent dynamics of the Dominican peso, which has shown a trend towards appreciation during the current year.<\/p>\n\n\n\n

There is no doubt that historically the behavior of the exchange rate has been important for economic agents, as it is a relevant variable for defining their investment and consumption plans. Episodes of variability in the value of our currency are followed with great interest, motivating journalists and economists to weigh their potential effects on the Dominican economy.<\/p>\n\n\n\n

Recently, the press has gathered various opinions on the current situation, which shows an accumulated appreciation of the Dominican peso of around 8.1%, where various columnists analyze its causes, as well as the sectors most benefited and those most affected.<\/p>\n\n\n\n

Given this reality, we must remember that since 2012 the BCRD has operated under an inflation targeting scheme, establishing an inflation target of 4% \u00b1 1%. Through this operational framework, the BCRD has managed to ensure that, from the beginning of its implementation to date, the average year-on-year inflation has been 4.0%, reducing both its level and its volatility.<\/p>\n\n\n\n

We recommend reading:Dollar price in the Dominican Republic this Wednesday, August 12, 2026<\/a><\/strong><\/p>\n\n\n\n

This has contributed to economic agents gradually anchoring their expectations to the target announced by the BCRD, rather than the exchange rate, as was the case in the past.<\/p>\n\n\n\n

Considering this and to enrich the debate, it is important to reiterate the elements that explain the recent behavior of the exchange rate and how it fits into the current monetary policy framework.<\/p>\n\n\n\n

Firstly<\/strong>, the behavior of the Dominican peso has been primarily associated with the dynamism of the main foreign currency-generating activities.<\/p>\n\n\n\n

Indeed, during the first half of the year, exports (US$8,746 million), tourism (US$6,716 million), remittances (US$6,291 million), and foreign direct investment (US$3,277 million) generated an additional US$2,800 million compared to the level observed in the same period of 2025, even in a context of currency appreciation.<\/p>\n\n\n\n

As a result of this increased flow of foreign currency, which has offset the higher demand due to the increase in the oil bill, the Dominican peso has appreciated against the US dollar by 8.1% cumulatively since the end of last year and 5.4% year-on-year.<\/p>\n\n\n\n

It is important to highlight that this exchange rate appreciation behavior is observed in most Latin American countries that operate under an inflation targeting scheme.<\/p>\n\n\n\n

Secondly<\/strong>, it should be taken into account that in 2025 the International Monetary Fund (IMF) reclassified the exchange rate regime of the Dominican Republic from a managed regime to a floating one.<\/p>\n\n\n\n

In other words, the value of the currency is essentially determined by supply and demand in the market. This decision recognizes a deeper market, with direct interventions by the Central Bank aimed primarily at moderating risks to inflation targets and financial stability arising from episodes of excessive exchange rate volatility.<\/p>\n\n\n\n

It should be noted that, during the current year, the BCRD has made foreign currency purchases of US$415 million, without having made any sales in the spot market; contrary to the opinion of some analysts that the direct interventions of the BCRD have fostered the current process of exchange rate appreciation.<\/p>\n\n\n\n

Thirdly<\/strong>, it is important to consider that what is relevant is that exchange rate fluctuations are consistent with economic fundamentals, as has been highlighted in the latest IMF reports for the Dominican Republic and in studies by the BCRD.<\/p>\n\n\n\n

In that sense, the most recommended approach for countries with inflation targeting schemes is to maintain a floating exchange rate regime, as it increases the economy’s resilience to absorb external shocks.<\/p>\n\n\n\n

Despite the international situation of uncertainty and higher commodity prices, the Dominican Republic is in a position of macroeconomic strength, with growth approaching its potential and a robust financial system.<\/p>\n\n\n\n

Furthermore, inflation is projected to close the year within the target range of 4% \u00b1 1%, in a context of expectations anchored to the target.<\/p>\n\n\n\n

Likewise, it is expected that the dynamism of foreign exchange-generating activities will continue for the rest of the year, with a current account deficit projected at around 1.3% of the gross domestic product (GDP), which would be financed nearly three times over by foreign direct investment.<\/p>\n\n\n\n

In that context, the Central Bank will continue to monitor international conditions in order to timely adopt monetary policy measures that contribute to the fulfillment of the inflation target, ensuring the proper functioning of the foreign exchange market and macroeconomic<\/a> stability.<\/p>\n","protected":false},"excerpt":{"rendered":"

With the interest of keeping economic agents and the general public duly informed, and taking into account the recent debate in the media regarding the behavior of the exchange rate, the Central Bank of the Dominican Republic (BCRD) presents some considerations on the exchange rate policy of a central bank operating under an inflation targeting […]<\/p>\n","protected":false},"author":133556,"featured_media":521141,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_members_access_role":[],"_members_access_error":""},"categories":[4],"tags":[15756,44182,44664],"class_list":["post-521140","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bcrd","tag-cover","tag-emi"],"acf":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/phj1q1-2bzu","jetpack_featured_media_url":"https:\/\/deultimominuto.com\/en\/wp-content\/uploads\/sites\/2\/2026\/08\/Captura-de-pantalla-2026-08-12-164229.png","dum_api":{"author_name":"Yerandi Santana","author_image":"https:\/\/deultimominuto.com\/wp-content\/uploads\/2026\/02\/cropped-WhatsApp-Image-2026-02-13-at-5.35.07-PM-96x96.jpeg","categories_name":["Economy"],"featured_media_url":"https:\/\/cdn.deultimominuto.com\/en\/wp-content\/uploads\/sites\/2\/2026\/08\/Captura-de-pantalla-2026-08-12-164229.png"},"_links":{"self":[{"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/posts\/521140","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/users\/133556"}],"replies":[{"embeddable":true,"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/comments?post=521140"}],"version-history":[{"count":0,"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/posts\/521140\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/media\/521141"}],"wp:attachment":[{"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/media?parent=521140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/categories?post=521140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/deultimominuto.com\/en\/wp-json\/wp\/v2\/tags?post=521140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}