ENTAX & FINANCE

The Guarani Is at a Seven-Year High: What That Does to Your Paraguay Budget

08/09/2026 · 8 min

Co-founder of Paraguay Compass, based in Asunción

The Guarani Is at a Seven-Year High: What That Does to Your Paraguay Budget

Updated 25 October 2026. This article was written on 8 September. Everything below is left as it was written then, because the argument held. The numbers simply moved further in the same direction. The euro now buys about 6,464 guaranies, against 6,860 in September and 7,580 in early April, so the fall is closer to 15 percent than the 10 percent described below. The dollar sits at 5,735, and the market's year end expectation has been cut to 5,905, well below the 6,450 forecast quoted further down. September inflation came in at 1.7 percent and the central bank held its policy rate at 5.50 percent on 23 October, while raising its 2026 growth forecast to 5 percent.

Something has happened to Paraguay this year that almost nobody in the relocation business is talking about, and it has a direct effect on what your move will cost you.

The Paraguayan guarani has been one of the strongest-performing currencies in Latin America in 2026. In early April, one euro bought roughly 7,580 guaranies. Today it buys about 6,860. That is a fall of close to 10 percent in five months, and it is not a rounding error on a relocation budget. It is the difference between the numbers you researched in spring and the numbers you will actually pay.

Paraguay did not get more expensive. Your euro got smaller.

How far has the guarani risen against the dollar and euro?

The guarani has been climbing against the dollar all year. It started 2026 at around 6,228 guaranies to the dollar and reached 5,962 on 23 August, which is close to the strongest the currency has been against the dollar in almost seven years. Over the twelve months to July, the exporters' chamber calculated that Paraguay's real exchange rate contracted 17 percent, the sharpest fall since 2011.

Measured through July, the guarani was the third-best-performing currency in Latin America this year, behind only the Colombian peso and the Costa Rican colón.

For the euro the picture is the same, with a bit more volatility on top. The twelve-month high for the euro was 7,581 guaranies on 8 April. The low was 6,819 on 29 July. The six-month average sits at roughly 7,137. So anyone who built a budget from a spring exchange rate is now working with a number that is around 10 percent optimistic.

Why is the guarani so strong in 2026?

Four things are pushing in the same direction.

The economy is growing. Paraguay closed 2025 with growth near 6 percent, and in July 2026 the central bank raised its forecast for this year to 4.5 percent. That is a solid number in a region that has not had many of them.

Both rating agencies now call it investment grade. Moody's got there first and S&P followed in December 2025, then reaffirmed through 2026. Investment grade widens the pool of institutions that are allowed to hold Paraguayan debt, and that brings money in.

Interest rate differentials favour the guarani. US rates have been coming down while guarani-denominated bonds still pay well, which makes holding guaranies attractive relative to holding dollars.

The central bank stopped intervening. For years the Banco Central del Paraguay sold dollars to slow the guarani's slide. Since October 2025, according to the exporters' chamber, it has not bought a single dollar. Without a buyer of last resort on the other side, the appreciation has run further than it otherwise would have.

Does a strong guarani mean higher inflation in Paraguay?

Here is where most people draw the wrong conclusion. A stronger currency is not the same thing as inflation, and Paraguay's inflation is genuinely low.

Consumer prices did not move at all in August 2026, a flat zero for the month, and annual inflation stands at about 1.5 percent. The central bank has held its policy rate at 5.50 percent, with its target sitting at 3.5 percent, so it has room and is in no hurry.

In other words, prices inside Paraguay are stable. What changed is the rate at which your money converts into the currency those prices are quoted in. If you earn and hold euros, the effect on your wallet is identical to a 10 percent price rise, but the cause is completely different, and that matters for how you plan.

There is a caveat worth knowing, because the headline number hides some real movement. Paraguay's consumer price index is built from a basket of around 470 items, and declines in some categories have offset increases in others. Beef has accumulated roughly 30 percent in price increases over two years. Fresh fruit is up something like 60 percent over the same period. Fuel rose 3.8 percent in August alone and close to 30 percent between February and August. A household that eats beef and drives a car is experiencing something meaningfully warmer than 1.5 percent.

How does the exchange rate change a 2,000 euro budget?

Take a household running a 2,000 euro monthly budget in Asunción.

In April, at 7,581 guaranies to the euro, that converted to about 15,160,000 guaranies a month.

Today, at 6,860, the same 2,000 euros converts to about 13,720,000 guaranies.

To buy in September what 2,000 euros bought in April, you now need roughly 2,210 euros. That is about 210 euros a month, or around 2,500 euros a year, on the same lifestyle with no price rises in Paraguay at all.

The effect is uneven across the categories of a move, and knowing which is which is the practical part:

Costs quoted in guaranies got more expensive in euro terms. Rent, deposits, furniture, a local car, groceries, school fees, domestic help, utilities, most local professional fees.
Costs quoted in euros or dollars did not move. Flights from Europe, apostilles and sworn translations obtained at home, international health insurance, and our own fees, which are set in euros.
Money already converted is unaffected. If you moved capital into guaranies earlier in the year, your position improved.

Our cost of living guide for Asunción was updated in November 2026 with current rents, prices and exchange rates.

Should you wait for a better rate?

We are not financial advisers and this is not advice about when to convert money. What we can tell you is what the people who forecast this for a living are saying, and what we see clients do that works.

The forecasts have been revised repeatedly, and always in the same direction. In September the consensus pointed to a partial reversal, with Itaú expecting around 6,450 guaranies to the dollar by the end of 2026 and the economist César Barreto putting the wholesale range at 6,200 to 6,300. By 19 October the market's year end expectation had been cut to 5,905, which is below where the dollar already stood in September. Measured over two years the guarani has gained roughly 36 percent against the dollar. Forecasters have been consistently wrong about when it turns, and that is the useful lesson: do not build a budget on a reversal somebody has predicted.

The practical answer is that currency timing is a bad reason to delay a relocation, and an even worse reason to rush one. Exchange rates move on a scale of months. Residency paperwork, selling a house, ending a lease, moving a family and setting up a business move on a scale of quarters and years. If you delay a move by six months to chase 4 percent on the exchange rate, you have spent six months of your life on a trade you cannot control.

What is worth doing:

Budget at a conservative rate. Use something close to today's rate, not the twelve-month average, and certainly not the rate from a blog post written in 2024.
Do not convert everything at once. Converting in tranches over your first year spreads the rate you get, which is what you actually want if you have no view on the currency, and you should not have a view on the currency.
Hold guaranies for guarani expenses. There is no reason to hold a large guarani balance if your commitments are still in euros, and no reason to hold euros for a rent payment due next week.
Recheck any figure older than three months. That applies to ours as much as anyone's.

Is a strong guarani bad news for people moving to Paraguay?

It is tempting to read a strong currency as bad news, because the immediate effect on a European budget is negative. That reading is too narrow.

A country with 1.5 percent inflation, a currency that markets want to hold, investment-grade ratings from both major agencies and a central bank with room to cut is a country that is doing something right. Those are the conditions that make a place worth moving to in the first place. The version of Paraguay where your euro stretched further was also the version with a weaker currency and less confidence behind it.

Paraguay remains substantially cheaper than the Netherlands, Germany or Belgium. It is simply about 10 percent less cheap than it was in April, and any provider who quotes you 2024 numbers without mentioning that is either not paying attention or hoping you are not.

What this means for your plans

If you are budgeting a move right now, build it at today's rate and add a margin. If you were given a cost estimate for Paraguay earlier this year, the euro side of it needs revisiting, whoever produced it.

If you would like us to walk through your numbers with current rates and a realistic view of what the first year actually costs, book a free consultation and we will go through it with you properly.

Frequently asked questions

Why has the guarani strengthened so much?

Four things push in the same direction: a growing economy, investment-grade ratings from both Moody's and S&P, interest rate differentials that favour the guarani, and a central bank that, according to the exporters' chamber, has not bought a single dollar since October 2025.

Which relocation costs got more expensive in euro terms?

Costs quoted in guaranies: rent, deposits, furniture, a local car, groceries, school fees, domestic help, utilities and most local professional fees. Money you already converted into guaranies is unaffected.

How much more does a 2,000 euro monthly budget cost now?

In September, buying what 2,000 euros bought in April took roughly 2,210 euros, about 210 euros a month or around 2,500 euros a year, with no price rises in Paraguay at all. The euro has fallen further since, to about 6,464 guaranies by 25 October.

Is Paraguay still cheaper than Western Europe?

Yes. Paraguay remains substantially cheaper than the Netherlands, Germany or Belgium. It is simply less cheap in euro terms than it was in April, because the guarani has strengthened.

What does this mean for you?

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