MercoPress. South Atlantic News Agency

Paraguay's Central Bank to take action keeping US dollar from further soaring

Argentine and Bolivian nationals purchasing large sums were one of the causes for the surge, it was argued

Paraguay's Central Bank (BCP) announced Friday that it would adopt additional measures to keep the US dollar from soaring further against the local guaraní after crossing the US$1 / ₲ 8,000 barrier on Thursday. Starting next week, the BCP will pour US$15 million daily into the exchange market to keep the quotation at bay.

“Given the recent volatility in the exchange rate, as a consequence of the greater uncertainty in the international environment and seasonal factors, the Central Bank of Paraguay will be present in the exchange market with daily sales of at least US$ 15 million, starting next week”, the BCP said in a statement.

So far, the Central Bank has injected nearly US$ 1.28 billion this year to slow down the US currency, already facing the same upward trend in the region, except Argentina. Paraguayan financial analysts said one of the factors pushing the US dollar were massive purchases from Argentine and Bolivian nationals and the low water level in the Paraguay River, which significantly reduces the transportation of goods, thus making imports more expensive. In 2023, the BCP injected US$ 833 million.

Despite Thursday's quotation, the dollar fell to ₲ 7,930 by Friday, representing an increase of almost 10% in 2024. Eugenio Caje of the Association of Importers and Traders of Paraguay (Asimcopar), stated that the impact of the rise in the dollar is already being felt in the 10% increase in the costs of imported products and goods and foresaw that the trend would continue.

“From Asimcopar we understand that the BCP is making interventions but we believe that it is not healthy either. Customs costs can be temporarily reduced to help us cushion price increases,” he argued. He added that it was necessary to work with the government on tax burdens impacting bureaucratic procedures because importers and traders “can think of special promotions” to mitigate the crisis.