Emerging Markets Rates and Currencies Handbook

Paraguay (PYG - Paraguayan Guarani) Citi in Paraguay Since 1958, Citi has been committed to the economic, social, and cultural development of Paraguay. Citi established and implemented the best financial products and services in the country and participated in one of the most significant projects for national development by funding landmark infrastructures. Citi has marked several milestones in Paraguayan history, becoming the first bank to introduce ATMs in the ‘60s as well as being the first institution to inaugurate the construction of the country’s first ‘intelligent’ building in the ‘90s. Citi was the first financial institution in the country to provide financial literacy programs as part of its social investment strategies, and the first bank to inaugurate its own cultural center to promote the development of the country’s arts and culture. Market Overview The guarani was created in 1943 replacing peso fuerte. Since its creation, the value of the currency has never been modified to offset historic devaluation, which serve as a proof of the country stability. The Paraguayan Central Bank maintains a floating monetary exchange policy and imposes virtually no controls or restrictions over foreign exchange transactions. The Central Bank requires Financial Institutions not to exceed daily USD position of $5MM. Convertibility The currency is fully convertible. Interest Rate The short end of the curve, up to 1.5Y, is priced with the Central Bank´s monthly primary auctions of LRM (Letras de Regulación Monetaria). The long end is financed with Government Bonds issued by the Ministry of Finance, with tenors from 3Y to 20Y. Primary auctions take place monthly. Secondary market is small and illiquid, most bond holders keep the underlying until maturity. 238