The Paraguayan Guarani (PYG) serves as the official currency of Paraguay. Named after the indigenous Guarani people, this currency was launched on October 5, 1943, replacing the Paraguayan Peso at a conversion rate of 1 Guarani for 100 Pesos. The Central Bank of Paraguay (Banco Central del Paraguay) is tasked with issuing and overseeing the Guarani.

The Paraguayan Guarani is not divided into smaller units due to significant inflation affecting its value. Historically, the Guarani was divided into 100 smaller units known as céntimos, but these are no longer in use because of inflation. Coins are available in denominations of 50, 100, 500, and 1,000 Guarani, while banknotes come in denominations of 2,000, 5,000, 10,000, 20,000, 50,000, and 100,000 Guarani.

The Paraguayan Guarani operates under a floating exchange rate system, meaning its value against other currencies is influenced by market dynamics such as supply and demand. Various factors can impact the Guarani's value, including inflation, interest rates, economic growth, and geopolitical events.

Paraguay has a mixed economy, with notable contributions from the agricultural, industrial, and services sectors. The country is a leading exporter of soybeans, beef, and electricity, the latter of which is generated by the Itaipú Dam, the second-largest hydroelectric power plant in the world. Additionally, Paraguay has a substantial informal sector that constitutes a significant part of its economic activity.

Paraguay encounters several economic challenges, including a high poverty rate, income inequality, insufficient infrastructure, and corruption. Furthermore, the economy's heavy reliance on agricultural commodity exports makes it susceptible to fluctuations in global commodity prices. To achieve long-term economic stability and growth, Paraguay needs to invest in human capital development, enhance its infrastructure, diversify its economy, and tackle governance and transparency issues. The government has initiated various economic reforms and development programs to confront these challenges and foster sustainable growth.

In conclusion, the Paraguayan Guarani is the official currency of Paraguay, managed by the Central Bank of Paraguay. The currency is not subdivided into smaller units, but coins and banknotes are issued in various denominations. The Guarani operates under a floating exchange rate, with its value determined by market forces. Paraguay's mixed economy significantly relies on the agricultural, industrial, and services sectors. Despite facing challenges such as high poverty rates, income inequality, inadequate infrastructure, and corruption, the government has implemented economic reforms and development initiatives aimed at promoting sustainable growth and addressing these issues.