Strong guaraní currency undermines Paraguay's export competitiveness despite robust growth.

The guaraní has unexpectedly become Latin America's best-performing currency year-to-date, driven by a robust export surplus that is generating tangible friction with the agricultural sector — and that paradox captures the current moment of Paraguay's economy better than any other data point.

According to ABC Color, the guaraní led the region's currencies in recent weeks, an appreciation that the Unión de Gremios de la Producción (UGP) described as a dollar falling "without a parachute." The complaint directed at President Santiago Peña's economic team is blunt: the strength of the local currency is eroding the competitiveness of exporters of soy, beef and other commodities that anchor the growth model. It is a structural irony that Colombia, Chile and Brazil know all too well — export success can become its own worst enemy if the central bank fails to intervene with sufficient resolve.

The macroeconomic backdrop surrounding that currency tension is otherwise solid. The BCP reports cumulative economic activity growth of 5.7% through August, and market participants surveyed by ABC Color estimate full-year growth will come in around 5%. The IMF, whose staff met this week in Thailand with BCP president Óscar Lovera and Finance Minister Carlos Carvallo, highlighted the strength of local fundamentals while warning of external risks. ECLAC, for its part, projects a 19% expansion in Paraguayan exports during 2026, a figure that places the country among the region's most dynamic economies and compares favorably with the slowdown gripping much of its neighborhood. The World Bank, meanwhile, backed that trajectory with a USD 300 million loan aimed at strengthening the country's economic resilience.

Exports are, indeed, the most visible engine of that dynamism. Paraguayan producers closed a historic tomato export deal to Uruguay this week, which ABC Color highlighted as a symbol of the diversification the agro-industrial sector is achieving beyond soy. That grain nonetheless remains the model's anchor: soy cycles continue to dictate the peaks and troughs of GDP with a regularity that BCP economists themselves acknowledge.

The stock exchange is on track to surpass the USD 8 billion mark in annual trading volume for the first time, which would represent a historic record and confirms the growing investor appetite for local assets. The MEF placed PYG 230.527 billion in Treasury Bonds in the local market this week, where the total stock of sovereign debt in domestic instruments now reaches approximately USD 1.2 billion. The government, according to ABC Color, is also exploring a new international bond issuance, which would further intensify the already notable reliance on this financing channel: bonds account for roughly 60% of total public debt, and interest payments grew 12.9% over the period analyzed.

That fiscal pressure is the obligatory counterpoint to the growth story. Public wages, pensions and debt service absorb nearly 70% of central government financing, leaving a narrow fiscal envelope for investment. Central government wage spending grew 9.9% in nominal terms, and the Defense Ministry — whose 2027 budget totals USD 488 million — will allocate 81% of that figure to personnel, a data point that congressmen reviewing the 2027 General Budget (PGN) flagged with particular emphasis. The UNA, for its part, requested an additional USD 61 million, while Health will receive more resources despite having only partially executed its 2026 budget. The MOPC, questioned before the Bicameral Commission over its handling of subsidies and Public-Private Partnership contracts, rounded out a fiscal picture that analysts describe as dynamic but structurally fragile on the spending side.

The Ueno Bank crisis adds an element of uncertainty that the productive sector is watching closely. The head of the Unión Industrial Paraguaya (UIP) publicly warned that the conflict between the BCP and the financial institution — whose stakes in "other companies" surged 8,000% according to data cited by ABC Color — could hit employment and the real economy if it drags on. The banking association Asoban, meanwhile, called the BCP's report on the case "incomplete" and urged guarantees of equal regulatory treatment, a sign that the dispute is opening fissures within the financial system. The tender for the Banco Nacional de Fomento (BNF) core banking system was suspended pending a ruling from the DNCP, adding another front of institutional instability in the sector.

The agenda for the coming days will be dominated by the evolution of the exchange rate and the BCP's response to pressure from the UGP, progress on the 2027 PGN budget process before the Bicameral Commission, and the outcome of the talks that Minister Lovera and the BCP president are holding in Thailand with multilateral organizations. The resolution of the Ueno Bank case will remain the main idiosyncratic risk factor for the stability of the local financial system in the near term.