ASUNCIÓN, July 16, 2025 – The exchange rate of the Paraguayan Guaraní against the U.S. dollar has continued its downward trend this week, attracting significant attention from investors and the general public. Following a decline for the third consecutive week, the dollar's selling rate in the retail market hit 7,600 Guaraní on Tuesday (July 15), marking a new weekly low. This represents a 115 Guaraní drop compared to 7,715 Guaraní last Tuesday, demonstrating significant volatility in just one week.

As of Tuesday (July 15), the dollar's buying rate in the retail market was 7,460 Guaraní, maintaining a considerable gap with the selling rate. In contrast, the dollar was trading at 7,740 Guaraní in the interbank market, indicating a difference from the retail market.

At the beginning of this week, on Monday (July 14), the dollar recorded a selling rate of 7,650 Guaraní and a buying rate of 7,470 Guaraní in the retail market. From last Friday through the weekend, it maintained levels of 7,720 Guaraní for selling and 7,500 Guaraní for buying. This trend suggests that the depreciation of the dollar is not a short-term phenomenon but likely to persist for a considerable period.

Experts analyze the dollar's weakness as a result of complex factors. Economist Wildo González noted that while dollar depreciation typically occurs in March, April, and May due to foreign currency inflows from soybean harvests, this year the decline has exceptionally deepened after this period.

González identified the government's issuance of domestic market bonds as a primary cause of the current dollar weakness. He explained, "Two consecutive years of trade deficits have put downward pressure on the exchange rate," emphasizing, "The dollar's decline is the result of a combination of various factors, but the decisive trigger was the Ministry of Economy's issuance of bonds worth $80 million (equivalent)." His analysis suggests that by issuing dollar-denominated bonds in the domestic market, the government absorbed dollars, increasing the supply of dollars in the market and relatively lowering their value.

Furthermore, other factors related to the financial system, along with foreign currency inflows from the International Monetary Fund (IMF), have also contributed to the dollar's weakness. At the request of the Paraguayan government, the IMF recently disbursed $195 million to Paraguay, which also acted as a factor increasing the dollar supply in the market.

The current dollar weakness is expected to have several impacts on the Paraguayan economy. While it may alleviate inflationary pressures due to lower import prices, it could lead to weakened price competitiveness for export-oriented businesses. Additionally, individuals or companies that have invested in foreign currency assets may incur losses, thus requiring continuous attention and cautious responses to exchange rate fluctuations.

Experts are closely monitoring whether this dollar weakness will be a short-term phenomenon or a medium-to-long-term trend. The exchange rate could fluctuate again depending on the government's additional foreign currency policies or changes in the international economic situation. Market participants should continue to pay close attention to key economic indicators and policy announcements when formulating their investment strategies.