Dominican Republic: Monetary Policy Rate Falls to 3.5%

Given the significant increase in global uncertainty associated with the economic impact of the coronavirus, the Central Bank decided to reduce the monetary policy rate from 4.5% to 3.5%.

Tuesday, March 24, 2020

In addition, a series of measures were adopted to provide liquidity, both in national and foreign currency, with the objective of making available to financial institutions a large amount of resources so that they can effectively meet the demand for credit from the productive sectors and Dominican households, reported the Central Bank.

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From the Central Bank of the Dominican Republic's press release:

March 2020. In an extraordinary monetary policy meeting held on Monday, March 16, 2020, the Central Bank of the Dominican Republic (BCRD) decided to reduce its monetary policy interest rate by 100 basis points, from 4.50% to 3.50% per year, as a preventive measure against the significant increase in global uncertainty associated with the economic impact of the coronavirus. At the same time, it decided to modify the interest rate corridor of the BCRD's short-term liquidity management scheme, reducing the interest rate of the permanent expansion facility (1-day repurchase agreements) from 6.00% to 4.50% per annum, while the interest rate of remunerated deposits (Overnight) is reduced from 3.00% to 2.50% per year.

Also, a series of liquidity provision measures were adopted, in national as well as foreign currency, with the objective of making a large amount of resources available to the financial entities in such a way that they can effectively attend to the credit demand of the productive sectors and Dominican households. Specifically, more than RD$52 billion is available to financial entities in national currency. First, the Monetary Board authorized the relaxation of the coverage requirements for legal reserve in national currency, recognizing as valid coverage the securities of the Central Bank and the Ministry of Finance for an amount of up to RD$22,321.0 million, equivalent to 2.0 percentage points of the legal reserve coefficient, to be used as loans to households and the productive sectors, at interest rates in all cases not exceeding 8.0 % per year. In addition, liquidity is provided through the repurchase agreements window for up to 90 days for an amount of up to RD$30 billion, with interest rates of 4.75% for repurchase agreements up to 30 days and 5.0% for repurchase agreements between 31 and 90 days.

On the other hand, liquidity will be provided in foreign currency for more than US$ 500 million, through two mechanisms: (1) repurchase agreements operations of 90 days for an amount of up to US$300 million through the electronic platform of foreign currency; and (2) the temporary relaxation of the coverage requirements of legal reserve in foreign currency of the multiple banks, recognizing titles of the Ministry of Finance in dollars as valid coverage of US$ 222 million, which represents 2.5 percentage points of the legal reserve coefficient in foreign currency. These measures will help facilitate the flow of foreign exchange to generating sectors such as tourism and exports that have been impacted by the fall in trade and tourism flows globally.



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Pandemic: Dominican Republic and its Monetary Policy

March 2020

Raising the amount of liquidity facilities for financial intermediaries by $909 million and reducing the legal reserve ratio in local currency by 0.5% are some of the measures taken by the Central Bank in response to the spread of covid-19.

Regarding the exchange market, the Central Bank was authorized to offer liquidity in dollars for $622.4 million, of which $400.0 million will be granted through Repos up to 90 days and the remaining $222.4 million will be released from legal reserve resources in foreign currency, informed the institution.

Nicaragua: Repos Interest Rate Falls to 5.5%

September 2019

The Central Bank informed that from September 2, the interest rate for one-day loans will be reduced from 6% to 5.5%.

On August 30 the monetary authority of the country informed that "... will induce an additional decrease of the interest rate of the monetary repurchase agreements operations, locating the rate for 1 day repurchase agreements, from 6.0% to 5.5%."

Nicaragua: Legal Reserve Falls to 13%

August 2019

The Central Bank announced that from August 12 it will reduce from 15% to 13% the legal reserve week rate in national currency.

From the Central Bank of Nicaragua statement:

Managua, August 07, 2019. The Central Bank of Nicaragua (BCN) reports that liquidity conditions are observed that favor the support of banking and monetary operations, which represents a change with respect to previous behavior.

Dominican Rep. Monetary Policy Rate Drops to 5.75%

April 2015

The Central Bank of the Dominican Republic has reduced its policy rate by 50 basis points, going from 6.25% to 5.75%.

From a statement issued by the Central Bank of the Dominican Republic:

At its monetary policy meeting in March 2015, the Central Bank of the Dominican Republic (CBDR) decided to reduce its monetary policy interest rate (MPR) by 50 basis points, going from 6.25% pa to 5.75 % per year, from April 1, 2015.

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