The governor of the Central Bank, Hector Valdez Albizu has reiterated the government will not devaluate the Dominican peso, but there has been a defacto devaluation. The official government rate to the dollar is RD$14.02 but only 22% of national exchange transactions are carried out at that rate. The dollar, stable at RD$14-US$1 during 1997, now reaps closer to the RD$15-US$1 ratio in exchange houses and commercial banks which handle 88% of exchange transactions. As of 29 April, exchange houses and commercial banks were paying from RD$14.35 to RD$14.75 per the dollar. Street vendors were buying the dollar for up to RD$15.30. Valdez Albizu has attributed the increase in the spread to speculation. Individuals and companies are converting their liquidity and savings into U.S. currency. He said that for the first time in five years the country was able to combine a 5.9% increase in the Gross Domestic Product with a 0.13% inflation rate for the first trimester of the year. President of the Colegio Dominicano de Economistas, Eligio Bisonó pointed out that it is the opinion of many that the peso is loosing value because of excessive government spending. According to Ignacio Méndez, president of the Asociación de Industriales de Herrera, one of the leading business organizations, said that it is normal that the dollar reap more pesos in times of national elections. He called for immediate action of the government because companies are already thinking of passing on the additional cost of the dollar to the final sales price of goods and services.
