The exchange rate is appreciating, interest rates are falling, and the economy is growing, but external risks are looming, according to economist Raúl Ovalle
SANTO DOMINGO. – The Dominican economy is experiencing a period of relative macroeconomic stability, sustained by an exchange rate that has appreciated in recent months and inflation that, although still high, remains within the Central Bank's target range. However, behind this image of calm, external risks are beginning to accumulate.
This was the argument put forward by economist Raúl Ovalle in a recent presentation at the RE/MAX Dominican Republic convention, where he explained that the appreciation of the peso is due to a favorable alignment of several factors: tourism at record highs, foreign direct investment at record levels, especially in the tourism sector, and remittances that exceed $2 billion annually.
This is compounded by a slowdown in imports, which reduces the demand for dollars and puts downward pressure on the exchange rate.
“A stronger peso is, in practice, an anti-inflationary anchor,” Ovalle noted. As long as the exchange rate remains stable, imported inflation moderates, giving the Central Bank room to avoid raising interest rates.
Data from the Central Bank of the Dominican Republic (BCRD) supports this assessment. In April 2026, the Central Bank maintained its monetary policy rate at 5.25% annually, in a context of sustained economic recovery, and the Monthly Index of Economic Activity (IMAE) grew 5.1% year-on-year in March, with an average of 4.1% in the first quarter.
Inflation, which reached 4.98% in January, moderated to 4.63% in March, its lowest level since October 2015, and has remained within the target range of 4.0% ± 1.0% for 35 consecutive months, according to data published by the Central Bank in May.
However, the agency itself warned that the conflict in the Middle East has driven up the cost of oil and other key inputs, and that inflation could temporarily rise above the target range in the coming months. The price of WTI crude oil closed April above $100 a barrel, and pressures on import costs remain.
In that scenario, bank rates have fallen considerably: the interbank rate went from 12.6% in June 2025 to 7.4% in February 2026. The average loan rate fell from 15.7% to 13.5% and the deposit rate from 9.0% to 6.1%.
However, Ovalle warned that delinquency rates on consumer loans have already surpassed the peak of the pandemic, even without the financial relief programs that existed at that time. "This means that banks will be more selective when granting consumer loans and will shift towards mortgages," he stated.
The overall picture is one of fragile stability: good macroeconomic news on the domestic front, with increasing pressure coming from abroad.
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