Asunción, Paraguay - The Paraguayan dollar exchange rate is rising sharply, nearing the 8,000 guarani mark. As of the market close on March 25th, some exchange houses recorded 7,990 guarani per dollar, while others traded between 7,970 and 7,980 guarani. This figure is only 10 to 30 points away from 8,000 guarani.
The interbank dollar exchange rate also rose slightly to 8,012 guarani, and the selling rate of US dollars at commercial banks remained high, approaching 8,080 guarani.
Over the past week, the dollar exchange rate showed volatility, rising by 20 to 40 points, but after the weekend, it showed signs of stabilization thanks to the active market intervention of the Central Bank of Paraguay (BCP).
Central Bank Injects $287.2 Million to Defend Exchange Rate
According to data from the Central Bank of Paraguay, foreign exchange market interventions of approximately $13 million to $17 million each took place last Wednesday and Friday. This coincides with the period when the dollar exchange rate saw a significant increase.
So far this year, as of March 21st, the Central Bank of Paraguay has sold a total of $287.2 million to mitigate sharp fluctuations in the exchange rate. The strong dollar trend started at the beginning of the year and fluctuated, but it has shown a clear upward trend again since the second week of March.
Exchange Houses Expect 8,000 Guarani Breakthrough Sooner Than Central Bank Forecast
The Central Bank of Paraguay forecasts that the dollar exchange rate will reach 8,000 guarani by 2026. However, local exchange houses suggest the possibility of surpassing 8,000 guarani sooner, within the first half of this year.
Expert Analysis and Outlook:
The recent rise in the Paraguayan dollar exchange rate is analyzed to be due to a combination of the following factors:
Strong US Dollar: The overall strengthening trend of the US dollar in international financial markets is affecting the Paraguayan exchange rate. The possibility of US interest rate hikes and expectations of economic recovery are factors boosting the dollar's strength.
Paraguayan Economic Situation: Deterioration in Paraguay's trade balance due to sluggish exports and increased imports may increase dollar demand, putting upward pressure on the exchange rate. In addition, sluggish domestic investment and the possibility of capital outflow are also cited as factors for the exchange rate increase.
Limited Effect of Central Bank Intervention: While the Central Bank of Paraguay is actively intervening in the foreign exchange market, it is pointed out that there are limitations to preventing the upward trend of the exchange rate without fundamental changes in economic fundamentals.
Market Sentiment: The market's expectation of a rising dollar exchange rate can stimulate speculative demand and act as a factor in raising actual transaction prices.
The future dollar exchange rate is likely to fluctuate further depending on the volatility of international financial markets, trends in Paraguayan economic indicators, and the direction of the central bank's monetary policy. Experts emphasize the need for continuous attention to exchange rate fluctuations and risk management at both corporate and individual levels.
An official from the Central Bank of Paraguay stated, "We are closely monitoring the recent rise in the dollar exchange rate and are continuously reviewing necessary measures to stabilize the market."
Meanwhile, some economic experts are expressing concern that "the rise in the exchange rate could lead to an increase in Paraguay's import prices, raising inflationary pressure," and are urging the government and the central bank to take active countermeasures.
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