Guaraní hits worst currency performance globally as Ueno Bank crisis deepens

The guaraní has posted its worst performance of any currency in the world against the dollar in recent days, according to data compiled by Bloomberg — a distinction that captures with brutal clarity the weight that Ueno Bank's collapse is bearing on Paraguay's economy and on investor confidence in its institutions. What began as the intervention of a fast-growing digital bank has evolved into the most intricate financial crisis Santiago Peña's government has confronted, with ripple effects extending from state-owned enterprise balance sheets to the credibility of the Banco Central del Paraguay and the integrity of the 2027 budget.

The epicenter of the storm remains the scale of public funds at stake. The Ministry of Economy and Finance filed a criminal complaint over 373.838 billion guaraníes — roughly 60 million dollars — from the Caja Fiscal invested in the intervened lender. The Itaipú binational entity had 163.8 million dollars and 115.2 billion guaraníes on deposit, according to ABC Color, although the company initially declined to specify how much was actually frozen after the intervention. Yacyretá announced legal action to recover its own funds, while Senave filed a complaint for 40 billion guaraníes and Petropar is similarly exposed, having maintained a commercial relationship with Ueno Bank on rebate programs that led to a criminal accusation. The pattern that emerges is of an institution with unusually extensive tentacles across the Paraguayan public sector, which amplifies both the direct damage and the political fallout.

The BCP's response has advanced unevenly. The central bank rolled out a consultation platform for depositors that briefly crashed under demand, launched a formal "resolution procedure," and activated the Deposit Guarantee Fund. According to La Nación, 93% of depositors eligible for the guarantee have already received an advance payment, and the total number of beneficiaries reached 1.2 million people. But that progress carries a concrete systemic cost: the Ueno case will absorb 50% of the total resources of the Deposit Guarantee Fund, a proportion that has set off alarm bells among analysts and business groups, with the Asociación Rural del Paraguay explicitly rejecting any expansion of the fund to also cover public deposits, which by definition were not shielded by the ordinary guarantee mechanism.

Moody's issued a warning that resonates beyond Paraguay's borders: the case exposes institutional governance weaknesses, though the firm expects an orderly transition. S&P Global Ratings, for its part, indicated that the political transition does not for now alter the country's rating, in line with statements from the Ministry of Economy itself, which insisted that investment grade is not under immediate threat. Nonetheless, the guaraní has absorbed the uncertainty with a depreciation that economists consulted by ABC Color describe as driven by the combination of mass deposit payouts — which involves an injection of guaraní liquidity and eventual dollar demand — and generalized distrust in institutional management. According to La Nación, the dollar hit record highs before staging a correction, but analysts are debating whether that adjustment is temporary or marks a structural shift in trend.

The scandal has produced direct political fallout. Marco Aurelio González tendered his resignation from the BCP board, and the Senate granted its consent to two key appointments: Schreiner to lead the institution and Fernando Rivarola — the former official identified as having put Ueno Bank in check from the inside — as a new director. Prosecutors entered the BCP building to also investigate Carlos Fernández Valdovinos, former Minister of Economy, and Carlos Carvallo, former BCP president, who turned himself in voluntarily. The government, led by Vice President Pedro Alliana during Peña's political absence, has decreed that those affected by Ueno will not pay fines or tax surcharges, and the Dirección Nacional de Ingresos Tributarios confirmed it will reschedule tax deadlines for affected businesses. The Chamber of Deputies suspended its review of the 2027 General Budget, which the MEF will have to entirely reformulate in light of the case's fiscal impact.

The damage to the real economy is already visible. Businesses tied to the Ueno ecosystem are reporting sales drops of up to 70%, with warnings of imminent closures. The tech firm Itti, linked to the group, faces questions about the tender for the core banking system of the Banco Nacional de Fomento, which was on track to be awarded in its favor. The Comptroller recommended terminating Nubicom's 5G contract and forwarded a report on its ties to Ueno to the Prosecutor's Office. Suspended labor contracts at Grupo Vázquez — linked to the bank — now require clearance from the Ministry of Labor.

Amid all this, Paraguay published macroeconomic data that in any other week would have been a headline in its own right: the BCP reported cumulative expansion of 5.7% through August, the IMF projects the country will grow nearly twice the global average in 2026, and inflation remains under control. That contrast between solid fundamentals and exposed institutional fragility is exactly what worries foreign investors: Paraguay can grow, but the question circulating in markets today is whether its institutions can sustain that growth without fissures that politically connected actors exploit for their own benefit.

What to watch in the coming days is multifaceted: the progress of the criminal investigation — with at least 27 individuals indicted and a reinforced team of prosecutors — the way new Economy Minister Óscar Lovera will reshape the 2027 PGN, the stabilization of the guaraní once the flow of guarantee payouts normalizes, and the decision the government takes on the public deposits trapped in Ueno that the Guarantee Fund cannot cover. The reaction of the rating agencies in the coming weeks will determine whether this episode remains a manageable crisis or turns into a prolonged drag on Paraguay's sovereign financing.