The U.S. dollar reached its lowest level of the year and the lowest point in nearly seven years in Paraguay on Thursday. The currency closed at G. 5,961 in the interbank market and around G. 6,000 in the cash exchange market. To find similar values, one must go back to 2019, in the pre-pandemic period.
At exchange houses, the currency was quoted at G. 5,920 for purchase and G. 6,000 for sale. The Central Bank of Paraguay (BCP) reported reference values of G. 5,964.91 for purchase and G. 5,988.62 for sale.
In annual terms, the currency has accumulated a decline of nearly 20%, deepening a depreciation cycle observed since mid-last year. The year had started with the dollar above G. 6,600, with April being the month of the most significant drop.
The BCP did not intervene in the foreign exchange market, attributing the strengthening of the guaraní to natural supply and demand factors. A recent central bank survey indicates that economic agents expect the downward pressure to continue in the short term.
The impact of the currency appreciation is asymmetric. While importers and consumers who conduct transactions abroad benefit from lower costs in guaranís, exporters face reduced margins due to the less favorable conversion of their dollar receivables.
Export associations have requested measures to contain the decline, alleging losses to profitability. In response, the BCP offered the use of forward contracts as a hedging tool to mitigate the effects of volatility.
The negative impact is also recorded in public accounts, with a significant drop in customs revenue, which is settled in dollars but converted into guaranís at an increasingly lower value.