An HVAC system includes an indoor heat-exchange coil disposed between a supply air duct and a return air duct. A damper is disposed in a re-circulation duct and is moveable between an open position and a closed position. A controller is configured to determine if the HVAC system is operating in a heating mode or an air-conditioning mode. Responsive to a determination that the HVAC system is operating in the air-conditioning mode, the controller is configured to determine if the variable-speed indoor circulation fan is operating at a minimum speed and if the relative humidity measured by the humidity sensor is above a pre-determined threshold. Responsive to a determination that the variable-speed indoor circulation fan is operating at the minimum speed and the relative humidity of the enclosed space is above the pre-determined threshold, the controller signals the damper to move to the open position.