More Room For PYG Appreciation

The Paraguayan guarani appreciated 4.7% between December 10 and December 16, a move we believe is attributable to the Banco Central del Paraguay's (BCP) decision to remove some controls on the traditionally managed currency. In a news release on December 3, the BCP announced that it had widened the margin of daily dollar purchases and sales to US$5.0mn, opening the door for larger-quantity trades of the unit. In response, the guarani strengthened markedly, reaching highs of PYG4,510/US$ on December 16, before closing at PYG4,600/US$. This represents the strongest performance against the greenback since before the EM-wide sell-off in Q408.

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