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Dollar Plummets, Value Down 20% in a Year
🇵🇾 Paraguay /Economy & Trade

Dollar Plummets, Value Down 20% in a Year

From ABC Color · (2d ago) Spanish Critical tone

Translated from Spanish, summarized and contextualized by DistantNews.

TLDR

  • The US dollar's value has fallen significantly, reaching its lowest point in five years and depreciating 20% over the past year.
  • This decline is attributed to external uncertainties, including the Middle East conflict and US economic policies.
  • The strengthening of the Paraguayan Guarani is expected to help stabilize prices of durable goods and imported items.

The US dollar continues its sharp descent in the local currency market, hitting a five-year low and nearing 6,400 Paraguayan Guaranies. This significant depreciation, amounting to approximately 20% over the last year, reflects a broader global trend influenced by various factors, including the ongoing conflict in the Middle East and recent economic policies implemented by the United States.

En el mercado local la baja en la cotización está en cercad del 20% en un año.

— ABC ColorHighlighting the significant annual depreciation of the US dollar against the Paraguayan Guarani.

In the domestic exchange market, the effective dollar rate closed at 6,420 Guaranies on Monday, while the wholesale or interbank rate settled at 6,416 Guaranies. These figures have not been seen in over five years, according to official historical data. Despite this sharp decline, private sector projections, such as those from Itaú Macro, suggest a stabilization of the dollar's value towards the end of the year, with an estimated rate of around 6,650 Guaranies.

En lo que respecta a la variación anual registra una caída del 20%, alrededor de G. 1.500 menos por cada dólar.

— ABC ColorQuantifying the annual drop in the dollar's value against the Guarani.

The appreciation of the Paraguayan Guarani against the dollar has several key impacts. It is expected to help keep the prices of durable goods, such as electronics and appliances, under control during the first half of the year. Furthermore, imported goods, which constitute about 30% of the basic consumption basket according to the Central Bank of Paraguay, are also anticipated to see a reduction in prices due to the strong performance of the local currency. However, sectors like agro-exports and meatpacking industries are experiencing a negative impact, as the lower dollar value reduces their income and export incentives.

Según estimaciones del Banco Central del Paraguay (BCP), los bienes importados representan alrededor del 30% de los productos de la canasta básica y se espera que esta fuerte reducción en la cotización del dólar tenga un impacto además en estos bienes.

— ABC ColorExplaining the expected impact of the dollar's fall on the prices of imported goods, which form a significant part of the basic consumption basket.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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