MercoPress. South Atlantic News Agency

Paraguayan businesses concerned as dollar keeps soaring

“We fear that this situation will affect the Christmas season,” Caje argued

Given the seemingly unstoppable soar of the US dollar against the local guaraní during a whole week, the Association of Importers and Traders of Paraguay (Asimcopar) said it feared the current trend might hit year-ending sales, which largely feature imported items.

“We are very concerned because this increase in the dollar directly affects products that we multistores commercialize and that will have as a negative effect the increase in prices for our consumers,” Asimcopar spokesman Eugenio Caje admitted. The rise in the exchange rate adds to the increase in logistics costs for the transport of imported goods, caused by the excessive drop in the levels of the Paraguay River, it was also explained.

“We are facing a scenario of higher prices, especially because we are entering the most important season of the year, and we fear that this situation will affect the Christmas season. This unexpected situation, with the increase of the dollar, is making us rethink the decisions taken in relation to the year-end holidays and we hope that the [Paraguayan Central Bank] BCP will act in order to collaborate with the containment or decrease in the quotation of the US currency,” Caje added.

After one year under President Santiago Peña, Asimcopar posted an average increase in sales between 5% and 7%, particularly in clothing, footwear, and bazaar products, “which undoubtedly represents a change in trend during the last year,” the guild said in a statement.

“In Asimcopar we have also found spaces for fruitful dialogues that have allowed us to show our concerns to the point of having achieved the modification of the Baggage Theft Law and we continue working for its correct implementation with the different institutional actors,” it went on.

Asimcopar also highlighted recent adjustments at the Economy and Finance Ministry, resulting in increased tax collection, in addition to improvements in public accounts and the fight against tax evasion.

Last week the BCP said the depreciation of the guaraní against the US dollar was still moderate - 4% so far this year - in a country where around 27.5% of the basic food basket consists of imported goods.

BCP Research Manager Sebastián Diz explained that the dynamics of the exchange rate movement responded to a global trend and was also replicated in other regional currencies. In Brazil, the real has fallen 13% against the dollar. “In Paraguay, we have an accumulated depreciation of 4% so far this year. Although it is above normal, they are still relatively moderate levels,” Diz said in a radio interview.