MercoPress. South Atlantic News Agency

Paraguay's currency steadily becoming a 'strong' currency based on positive indicators

The Central bank had international reserves equivalent to 20% of GDP

The Paraguayan currency, Guaraní, is expected to revalue 1.4% against the US dollar by the end of the year becoming one Latam's strongest given its positive macroeconomic indicators. This follows a strong performance during the first half of the year when the price of the dollar in the capital Asunción wholesale money exchanges dropped from 4.450 Guaraní to 4.240, according to private consultants “Consensus Economics”.

At the other end the Venezuelan Bolivar and the Argentine Peso, and to a lesser extent the Brazilian Real are forecasted to lose ground vis-à-vis the US dollar.

“The strengthening of the Guarani is evident given a surplus of dollars and inflow of capital to Paraguay, which is contrary to the prospects at the beginning of the year. The central bank is accumulating international reserves”, said economist and former Finance minister Cesar Barreto.

Nevertheless, “we expect the Guaraní to stabilize at 4.300 to the US dollar towards the end of the year”, added Barreto.

“With all the inflow of capital to Paraguay, it is only natural that the local currency should strengthen; we believe the exchange rate will stabilize in the range of 4.300 G to the US dollar with no surprises movements”, said economist Anibal Insfrán.

Paraguay macroeconomics indicators are very positive, “not only from a fiscal point of view but also foreign debt which is only 8% of GDP; central bank reserves are equivalent to 20% of GDP, and we have ahead a good agriculture year and good prices for the country's main export produce, and last but not least, inflation is flat”, pointed out Insfrán.

The “Consensus Economics” report also points out that Venezuela's Bolivar will continue its downfall against the US dollar, approximately 45.1% by the end of 2014. The Argentine Peso is forecasted to drop 23.1% against the greenback and the Brazilian Real, 3.8%.

But the Guaraní is not the only star currency: the Mexican peso is expected to strengthen 3.1% and the Colombian Peso over 1%.