The continued appreciation of the guarani against the dollar is forcing Paraguayan companies to recalculate their investment plans, especially in the construction and export sectors, where costs are split between dollarized components and local currency expenses. Financial consultant Jorge Usandivaras warned that many projects were designed with an exchange rate of around 7,500 to 7,600 guaranis per dollar, and now face altered parameters.
“There are many investment projections that were made with a dollar at 7,500 or 7,600 guaranis. And now they look at me and say: ‘and now what do I do?’ Very important parameters have changed,” Usandivaras said during the streaming program Letras Chicas.
The expert highlighted that Paraguay effectively operates as a bimonetary economy, where the dollar remains the main reference for international investors. “Whoever brings in a dollar wants to take out a dollar and ten or a dollar and twenty. If they see the numbers don’t add up, it’s a problem,” he explained.
Usandivaras attributed the strength of the guarani not only to local factors but also to a global depreciation of the dollar in recent years, driven by U.S. trade policies. “The dollar has depreciated a lot against emerging market currencies. Part of it was policy from this U.S. government. They wanted to export more, put up tariff barriers, and increased exports with a cheaper dollar,” he commented.
Additionally, the strong inflow of capital into the country—through bond issuances and foreign direct investment—also pressures the exchange rate downward. “The government and private entities issued bonds abroad. That’s a lot of money coming in,” he added.
Major export trade associations have expressed growing concern. The Paraguayan Chamber of Exporters and Traders of Cereals and Oilseeds (Capex) reported that many companies are operating “almost without profit margins” to maintain their markets. The Paraguayan Chamber of Banana and Pineapple (Capabap) described the situation as a “silent catastrophe,” noting that the guarani has appreciated about 25% against the dollar over the past twelve months, far above the currencies of Brazil (1%), Uruguay (4%), and Chile (3%). The banana sector depends on more than 20,000 families in the country.
Directors of the Rural Association of Paraguay (ARP) also conveyed to the Central Bank of Paraguay (BCP) their “deep concern” over the exchange rate scenario.
On the other hand, the director of Macroeconomic Analysis at the BCP, Samuel Cañete, stated that, so far, foreign trade data do not show a significant negative impact on exports. “We do not see a very relevant or negative impact, because what we are seeing is that exports are growing and, in particular, industrial exports are also growing,” Cañete said. He explained that the dollar’s decline is mainly due to external factors, such as the global weakening of the U.S. currency and the widespread appreciation of regional currencies, as well as internal factors like Paraguay’s higher economic growth, low inflation, level of international reserves, and improved credit rating.