Exporters warn that falling dollar is already squeezing their costs

Paraguay's exporters are feeling the dollar's decline in their operating costs, even as the country continues to increase its exports. Sebastián González of the Paraguayan Exporters Chamber, Capex, said companies earn mainly in dollars but pay many costs in guaraníes.

The problem is straightforward: at the current exchange rate, exporters receive fewer guaraníes for the same dollar income. González said companies are already drawing on reserves and seeking financing while making financial and structural adjustments to offset the currency gap.

Capex says Paraguay's exchange-rate movement stands out in the region. Its analysis puts the dollar's depreciation at 7% in Brazil, 5% in Peru and 2% in Chile, while Uruguay saw almost no change. In Paraguay, the dollar has lost close to 20% of its value, according to the group.

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The dollar does not bother us. It is something we work for because of exports.

González said exporters were not asking for a return to rates of 7,500 or 8,000 guaraníes per dollar. He pointed instead to the 6,584-guaraní rate used in the national budget, which he said should serve as a reference for the Paraguayan market. He also cited the DXY index, which tracks the dollar against a basket of currencies, as an indicator the sector is watching.

Capex described the situation as contradictory: Paraguay is exporting more, but those revenues are converted at a lower exchange rate. González estimated the difference at about 19%, equivalent to roughly $2.342 billion. He said some of that money could have affected tax collection at a time when public revenues are also under pressure. “We generate foreign currency, we generate jobs,” González said, arguing that the exchange-rate effect reaches beyond exporters.

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We generate foreign currency, we generate jobs.