Economist Rolando Reyes forecast that the peso will continue to depreciate in
2004, despite the increases in remittances, tourism receipts and Dominican
exports. Reyes based his prediction on the present excess in money supply. He
said in an interview with Hoy newspaper yesterday that it is urgent the
government remove RD$10 billion to RD$15 billion from circulation as soon as
possible. ?If a strong tourniquet is not in place to control the monetary
hemorrhage, it will be beyond control in 2004,? he said. He pointed out that
from October to November alone, monetary emissions went from RD$64.4 billion to
RD$70.5 billion, and by mid-December had climbed to RD$76.2 billion. He also
mentioned that internal financing of the Central Bank stood at RD$91.6 billion
in October and had climbed to RD$98.5 billion by November. He said the domestic
financing was propelled by the continued assistance to troubled banks, but felt
they could increase even more if depositors begin to cancel their certificates
of deposit with the Central Bank. Reyes said that the export sector has come out
a winner in this situation, but that local manufacturers also stand to gain as
imports become too expensive for local consumers. ?What we are going to have in
2004 is an intense restructuring,? he said, as he affirmed his belief that while
the economic crisis has hit rock-bottom, the country would still need another
three or four years to recover fully. He forecast that 2004 will be a year
marked with uncertainties, risks and volatility, both economically as
politically speaking.