Paraguay: Currency & Financial System

Paraguay's currency, the guaraní, was created by a law passed on October 5, 1943, with the first notes issued in 1944 to replace the peso fuerte at a rate of one guaraní to 100 pesos. The currency was pegged to the US dollar at 126 guaraníes per dollar from 1960 until the peg ended in 1985, after which its value declined steadily. A planned 2011 redenomination that would have introduced a "new guaraní" at 1,000 to 1 was suspended over concerns about confusion and implementation problems. Persistent inflation also pushed centavo coins out of circulation entirely, and pre-2005 coins in denominations up to 500 guaraníes lost their legal tender status in January 2014.

The Central Bank of Paraguay (BCP) has floated the guaraní since the dollar peg ended in 1985 and manages monetary policy through an inflation-targeting framework. As of early 2026, the guaraní traded at roughly 6,500 per US dollar after appreciating about 16 percent against the dollar in 2025 and a further 9.1 percent by April 2026, even as the BCP expected inflation to converge toward its target over the course of the year. The currency remains among the most numerically devalued in the Americas, a legacy of decades of inflation rather than a recent trend.

Paraguay's banking sector remained well capitalized as of March 2026, with a total capital adequacy ratio of 17.8 percent and a non-performing loan ratio of 2.3 percent, both comfortably within healthy ranges, according to the International Monetary Fund. Credit growth slowed from nearly 12 percent in 2025 to about 3 percent in early 2026, broadly in line with the regional pace, while dollarization of bank credit continued a gradual decline that began in 2016. The Superintendency of Banks, operating under the BCP, oversees commercial banks, and a wave of mergers, including the Continental-Río combination in August 2025, has modestly raised market concentration in the sector.