Central Bank explains the appreciation of the Dominican peso and its impact on the economy
The Central Bank of the Dominican Republic (BCRD) has issued a series of technical considerations regarding the recent public debate on the behavior of the exchange rate. In a year where the Dominican peso has shown a trend toward appreciation, the monetary entity seeks to clarify the factors that influence this dynamic under the current inflation targeting scheme.
During the current year, the Dominican peso has recorded an accumulated appreciation of nearly 8.1%. This phenomenon, which has generated diverse opinions among analysts and economic sectors, is analyzed by the BCRD as a process consistent with the country’s macroeconomic fundamentals and the monetary policy in effect since 2012.
Key factors of exchange rate behavior
The Central Bank highlights three fundamental pillars that explain the current situation of the foreign exchange market:
- Dynamism in foreign currency generation: The strength of the peso responds to a greater flow of income from strategic sectors. In the first semester, exports, tourism, remittances, and foreign direct investment generated approximately US$2.8 billion more compared to the same period in 2025, offsetting the demand for the oil bill.
- Floating regime: Following the International Monetary Fund (IMF) reclassification in 2025, the Dominican exchange rate regime shifted to a floating one. This means that the value of the currency is primarily defined by market supply and demand, with BCRD interventions limited solely to moderating excessive volatility.
- Consistency with economic fundamentals: Current fluctuations align with the country’s macroeconomic reality, allowing for greater resilience against external shocks, an approach supported by international organizations.
The BCRD has made foreign currency purchases of US$415 million so far this year, without making any sales in the spot market, refuting versions suggesting that direct interventions have been the driver of the current appreciation.
Stability and growth prospects
Despite the uncertainty in the international environment and the variation in commodity prices, the Dominican economy maintains a solid position. The Central Bank projects that inflation will close the year within the target range of 4% ± 1%, thanks to the fact that economic agents have managed to anchor their expectations to this inflation target.
For the close of the fiscal year, the dynamism in foreign currency generation is expected to be maintained, with a current account deficit projected at around 1.3% of the Gross Domestic Product (GDP), which would be amply covered by foreign direct investment. The BCRD reaffirms its commitment to continue monitoring global conditions to ensure price stability and the proper functioning of the foreign exchange market.
