Paraguay central bank to invest currency reserves in U.S. Treasuries

ASUNCION (Reuters) – Paraguay will begin investing a portion of its foreign reserves in U.S. Treasury bonds at the end of the year, central bank President Carlos Fernandez Valdovinos told Reuters in an interview on Monday.

The transactions would come in multiple stages, Fernandez said. The World Bank would advise the central bank on the first round of deals, and the Inter-American Development Bank will assist later on. Fernandez said investment banks may advise future rounds.

Fernandez declined to reveal the amount that would be invested in the first stage but said it would be a marginal portion of the country’s $8 billion in international reserves.

The landlocked South American country has until now kept its reserves protected in the Bank of International Settlements for fear they might be embargoed because of a legal dispute over whether Paraguay was liable for an unpaid debt incurred by an adviser to former dictator Alfredo Stroessner.

The dispute was resolved in Paraguay’s favor in a U.S. court in May, clearing the way for Paraguay to invest its assets.

“We were very restricted in terms of what we could do with our assets,” Fernandez said. “This is a good signal, it’s a good thing for Paraguay’s image.”

Reporting by Daniela Desantis; editing by Luc Cohen and Grant McCool

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