Breaking: Paraguay set for major currency surge - Dollar on the rise!

Paraguay Braces for Rising Dollar

As the Central Bank (BCP) of Paraguay sold US$216 million to local financial institutions to stabilize the currency, the US dollar continues its climb in the country. Experts forecast that the dollar could hit ₲8,000 in the first half of 2025 due to global tensions and a soft soybean market.

Global Influences:
- Emil Mendoza of the Association of Exchange Houses pointed out that international conflicts and unfavorable soybean prices are significant factors affecting products linked to the dollar. He emphasized in a radio interview that the ongoing global unrest is wreaking havoc on the local market, causing the dollar to surge.
- Mendoza highlighted that Paraguay’s soybean production fell short of expectations, attributing it to the low international prices prompted by tensions among major players like the United States, the European Union, China, and India.
Clarifying Misconceptions:
- BCP board member Miguel Mora countered claims of dollar leakage to Bolivia impacting the exchange rate. He clarified that Paraguay’s minimal trade with Bolivia is conducted through formal channels and does not significantly sway the exchange market, unlike the situation with Argentina.
- Mora dismissed the notion that informal cash transactions, which account for only 5%, could exert substantial pressure on the dollar. He agreed with Mendoza that plummeting commodity prices, uncertainties in global trade, and external factors like trade wars and political instability play pivotal roles in the dollar’s escalation.
Future Outlook:
- While Mora acknowledged that export revenues might alleviate the currency pressure later in the year, he cautioned that the upward trajectory of the dollar is likely to persist in the near term due to the intertwined impact of these global factors.

In conclusion, Paraguay finds itself grappling with a strengthening dollar amid a complex web of international dynamics. As the country navigates this financial landscape, it must remain vigilant and proactive in responding to the evolving economic challenges to safeguard its financial stability and growth prospects.