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Montevideo, November 2nd 2024 - 10:29 UTC

 

 

BCP intervention keeps guaraní afloat against US dollar

Thursday, October 31st 2024 - 10:19 UTC
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But Paraguay's economy faces other challenges such as the neverending downspout pushing freight costs upwards But Paraguay's economy faces other challenges such as the neverending downspout pushing freight costs upwards

After an intervention by the Central Bank of Paraguay (BCP) deemed as “timely” in Asunción's financial circles last week, the local currency appreciated against the US dollar and fell further away from the psychological ₲ 8,000 barrier. The BCP pledged to further inject at least US$ 15 million daily into the market, to stabilize the local currency. The dollar went up 9% against the guarani in 2024, largely driven by demand for the dollar in the international market and by local exchange needs.

Any further devaluation of the guarani could impact inflation and overall economic stability, analysts fear. Although the BCP's decision was welcome to alleviate the pressure on the guarani, some experts warn that the global and regional economic context may require additional interventions to stabilize the currency in a more sustained manner.

In this scenario, Paraguay is also hit by a neverending critical downspout of the local rivers which resulted in freight cost increases of up to 40% which will inevitably hit retail prices of imported goods. River and Maritime Shipowners Center (Centro de Armadores Fluviales y Marítimos - Cafym) President Raúl Valdez said this week that the transport capacity has been limited by an average of 30%. “Depending on the type of freight, whether it is bulk, containerized or liquid, we can talk about an average value of at least 40% increase in freight,” he also said.

“Attending to the great importance that the river transport sector represents for imports and exports in our country, which is around 80%, we understand that this has an absolutely important relevance for the whole economic sector,” he added.

In addition, transactions with electronic wallets in Paraguay are taking a downward turn. According to the BCP, trade amounted to ₲ 8.4 trillion from January to September which represented a 15.28% yoy decrease from the previous ₲ 9.9 trillion. One of the causes could be the commissions charged for each transaction, it was explained.

Categories: Economy, Paraguay.

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