With the market having shifted to a rate of RD$23 to US$1, President Hipolito Mejia says that he would like the dollar to be set at a rate of RD$20 to US$1. President Mejia, nevertheless, said that the Monetary Board would determine at what price the rate is set.
Meanwhile, business sectors have criticized the government?s decision to restrict money in circulation on the grounds that this will result in further increases to the interest rate. Despite countless analyses of economists, the government has yet to show any serious intent to reduce its present level of spending and borrowing, measures, they say, would have a real effect on the exchange rate.
Instead of imposing such measures, the government has opted to reduce money in circulation and announced that it will auction RD$2 billion [of sovereign bonds?] as a means of stabilizing the exchange rate. Former Minister of Finance Arturo Martinez Moya warned that these steps do not touch upon the real problems that are causing the peso to lose value to the US dollar. He said that one of the major obstacles is that the government continues to increase its debt with local commercial banks.
Interest rates today stand at 36 to 42 percent for loans under RD$2 million. The president of the Federacion de Comerciantes Detallistas de Republica Dominicana (Fecoderd), a leading retailers? organization, defined what the government has done as ?poner un clavo para sacar otro? – putting in one nail to take out another. He said that the smaller retailers only have access to money at 45 percent in banks and 60 percent in the informal markets.
