Since the start of 2026, Paraguay’s currency, the guarani, has strengthened steadily against the US dollar, making it one of the best‑performing currencies in Latin America. According to Bloomberg data, as of July 2026, the guarani had appreciated by 8.58% against the dollar, ranking third in the region, behind only the Colombian peso (+14.60%) and the Costa Rican colón (+10.17%), and ahead of the Brazilian real (+6.95%) and the Mexican peso (+2.64%).

In its latest economic outlook, Citi Bank noted that the dollar is expected to remain weak over the next 12 to 18 months, a trend that could further boost the guarani and ease imported inflation. Ernesto Revilla, Citi’s Chief Economist for Latin America, said that the current dollar weakness is favorable for the currencies of raw‑material exporters in the region, as high international commodity prices combined with a softer dollar improve the region’s terms of trade.

The guarani’s appreciation is mainly driven by strong export revenues. In June 2026, Paraguay recorded a trade surplus of US$47.09 million, with exports rising 25.1% year‑on‑year to US$1.74 billion, driven by larger shipments of soybeans, soybean oil, and other agricultural products. In addition, after Paraguay obtained an investment‑grade rating last year, foreign investor interest has continued to grow, further boosting foreign‑exchange inflows. Former Finance Minister Ferreira noted that the massive soybean harvest this year brought in substantial dollar inflows, making the guarani’s depreciation twice that of other countries.

However, a stronger currency is a double‑edged sword for Paraguay’s economy. While importers benefit, exporters are under pressure because their dollar revenues shrink when converted into local currency. Paraguay’s Exporters’ Chamber has already held meetings with the central bank to voice the industry’s concerns. Analysts point out that Paraguay’s economy is heavily dependent on agricultural exports—soybeans and beef account for more than 70% of total exports—so a sustained appreciation may erode its export competitiveness.

Looking ahead, Citi believes that the current favorable exchange‑rate environment is likely to be maintained in the short to medium term. However, the currency’s trajectory still depends on external factors such as US Federal Reserve monetary policy and the global economic situation. Balancing the inflation‑relief benefits of currency appreciation against the loss of export competitiveness will remain a key challenge for Paraguay.