Guaraní's strength threatens exporters despite Central Bank assurances.

The guaraní has been appreciating against the dollar for weeks, and exporters aren't buying the Banco Central del Paraguay's explanations — that currency tension, more than any macroeconomic data point, is the thread connecting today's most pressing stories in Paraguay.

The dollar weakened once again against the guaraní, a trend the BCP has sought to attribute to seasonal factors and increased foreign currency supply from the agro-export sector. However, according to ABC Color, exporters reject that reading and warn that the falling exchange rate is eroding their competitiveness at a moment when margins are already compressed. The debate over a possible BCP intervention in the FX market has gained momentum, with analysts split between those who view the appreciation as a sign of macroeconomic strength and those who read it as a silent threat to the external sector. This is no minor technical dispute: Paraguay — whose economy grew 4.7% in the first quarter of the year driven by agriculture and services, according to official data cited by ABC Color, and which the BCP estimates was expanding at an annualized 5.6% pace as of end-July — depends on exchange-rate competitiveness to sustain precisely the engines that explain that dynamism.

The fiscal backdrop complicates the picture further. The Ministry of Economy and Finance faces debts to the construction sector exceeding USD 300 million in outstanding principal and interest, while the pharmaceutical sector awaits collection of nearly USD 1 billion owed by the State. The MEF has begun making partial disbursements — more than USD 27 million to suppliers this week, according to several sources — but the pace is insufficient to appease creditors. Against that backdrop, the news that the Economy Minister traveled to Paris to meet with international agencies was received with irritation by some ruling-party deputies, who are demanding answers about what they termed a "scam" against State suppliers. The government is seeking external financing of USD 1.357 billion to shore up public accounts and does not project restoring budget balance until 2028, a horizon analysts consider optimistic given current spending pressures. Private banks have signaled openness to collaborate on a supplier debt repayment plan, according to ABC Color, which could offer a short-term bridge but does not resolve the structural question of how to sustain spending without breaching the fiscal rule that, according to Última Hora, has been observed only three years since its enactment.

The reform of the Caja Fiscal, which the Senate expects to enact this week with modifications, illustrates the government's difficulty in translating a growth bonanza into lasting reforms. Experts cited by ABC Color describe it as a "minimal reform" that squanders a historic opportunity, while ruling-party lawmakers admit to being unfamiliar with the bill's contents. The IPS, whose restructuring the government also defends, and the debate over whether to tax accumulated reserves held by private companies add an additional layer of uncertainty for the corporate sector.

Two geopolitical readings deserve attention. A report disclosed by ABC Color concludes that China wields greater real economic weight in Paraguay than Taiwan, despite Asunción maintaining formal diplomatic relations with Taipei — a contradiction that has not gone unnoticed in business circles and that resonates with the mounting pressure Beijing exerts on Taiwan's last remaining Latin American allies. In parallel, Paraguay is emerging as an investment and residency destination for Brazilians seeking fiscal stability and lower costs, a trend that reinforces the interest of REDIEX, the investment agency, and that the government is looking to capitalize on during its international roadshows.

In the energy sector, output at Itaipú has declined, which over the medium term could affect revenues from energy cession to Brazil. ANDE, meanwhile, reports rising domestic electricity consumption — a signal of industrial and residential activity — but faces Senate scrutiny over a lack of transparency in its agreement with Atome, the UK green hydrogen firm seeking to set up operations in the country. Large industrial energy consumers are demanding clear rules through 2037, a request that dovetails with the logic the government invokes in defending the "concessions" offered to Atome as necessary to attract large-scale investment.

On the labor market front, the minimum wage adjustment review continues, with economists warning that a poorly calibrated increase will generate greater inflationary pressure and could deepen informality, which according to Última Hora already amounts to 40.3% of GDP. That figure — an underground economy approaching half of formal output — is perhaps the most disturbing number on a day when the government is projecting regional leadership in growth.

In the coming weeks, markets will need to closely track three variables: the BCP's decision on FX intervention and its implications for exporters; progress on the supplier repayment plan and possible bank participation in that scheme; and the final vote on the Caja Fiscal reform, whose actual scope will determine whether the government has the political will to correct one of the most chronic fiscal imbalances of the Paraguayan State.