The most recent issue of the British magazine, The Economist, anticipates a further decline in the value of the peso. By year’s end, dollar would cost DR$16.65 and, due to further erosion, the peso would finish 2001 at DR$18.39, and 2002 at DR$18.90. The variations, if realized, represent a cumulative devaluation of 14.75%. The official current exchange rate, as established by the Central Bank, equates the dollar to DR$16.47. The Economist attributes the pressures on the peso to the outflow of the country’s hard currency that has been used to iron out the differential in the cost of petroleum products and the income they produce locally. Monetary authorities muted the effect on the local economy by this year’s precipitous rise in the cost of a barrel of oil in international markets. The price of gasoline and other fuels was left unchanged, and peso-dollar exchange rate was held at DR$16.05, although the DR was hemorrhaging hard currency. Dollar reserves decline from $689 million in December 1999 to US$435 million in July 2000. The Economist expressed doubt as to whether the DR could recuperate its reserves without significant new foreign investment and a reduction in the price of petroleum in world markets. (2 November 2000)
