Word is getting out that Brazil is becoming unaffordable for the independent traveller, so Paraguay is becoming an alternative route between the lower-priced countries of Argentina and Bolivia. People enter at the capital, Asunción, stay a while, and then move on to points in Bolivia north and west. Force of circumstance compelled me to arrive by a different route – crossing the Friendship Bridge from Foz do Iguaçu in Brazil to Ciudad del Este. I was one of only three non-South Americans on the buses.
Ciudad del Este is a curious place. Built as the service centre for the Itaipú hydroelectric dam – once the largest in the world – the city flows over a series of hills and was not designed for wheeled luggage. After a 14-hour bus journey, a brisk walk to a hotel seemed appealing, but after half an hour of dodging street sellers, cars, motorbikes, potholes and steep steps, a taxi would have been far better.
Now that the dam is complete, Ciudad del Este's existence is given over to selling things. You can buy anything duty-free: electronic goods, perfume, jewellery, guns, "designer" clothing and sportswear. As likely as not, it won't turn out to be what you thought you were buying when you open the box. It's safer to buy fruit or herbs from barrows at the street corners than the pirated CDs and DVDs on the makeshift table next door.
The main street leading away from the Friendship Bridge is pandemonium. As you move further away from here, the streets become quieter, with more emphasis on money exchange, hotels and places to eat. Further out still are leafy suburbs, parks and the Lake of the Republic.
Beyond the lake is the only hostel in town: CDE Backpackers. All the other places to stay cater for business visitors and cross-border shoppers. One street has hotels of diverse origin – Venecia, Austria, Munich, El Caribeño – reflecting a mixed city. The lunch buffet at the Yrupê restaurant included Italian, Chinese, Brazilian and Paraguayan dishes. The languages spoken are Spanish, Portuguese and Guaraní and, having just arrived from Brazil, I was speaking a worse mix of "Portuñol" – Portuguese muddled with Spanish – than ever.
In the eastern half of Paraguay between Ciudad del Este and the capital, red earth roads and the termite mounds are framed by rich green vegetation. Vast fields of cereals roll away north and south under a huge sky. Brangus cattle (an Aberdeen Angus and Brahmin cross) graze amid the scrub. Neat and prosperous farms, swept and raked clear of leaves and fallen fruit, stand beside agro-industrial plants and flour mills. Tethered cows, horse-drawn carts and decrepit trucks sit next to brand-new machinery.
The second-hand double-decker bus to Asunció* crawls out of town looking for passengers. It takes 50 minutes to get out of Ciudad del Este. We wait at a bus stop in a distant suburb. Why? My neighbour says: "This is an abuse! How ridiculous."
In dribs and drabs, more people get on, running the gauntlet of food stalls and hawkers. Later, the police stop the bus for a document and luggage check. Few are picked out, but it takes time and my neighbour says: "We've been taken prisoner!" At each stop, vendedores ambulantes dash on board selling mobile phones, cases and headsets, newspapers, sunglasses, knick-knacks and chipás – a cheese bread with a faint aniseed taste, delicious warm and smelling very tempting.
Near the central town of Coronel Oviedo, a girl in the pink-and-white uniform of Chipería Santo Domingo sold more than any other seller. Had she picked the right time when the bus was getting late and passengers were hungry? Did she have the right looks? Or did the passengers simply know her chipás were the best?
My arrival in the capital coincided with the Día de la Primavera on 21 September. A band called Salamandra were playing in the Plaza de Armas, in front of the pink Cabildo. To celebrate the arrival of spring in the southern hemisphere, the Viceministry for Youth had organised an all-day rock concert in the heart of Asunción's parliamentary district, with areas for BMX riders and skateboarders to show off their skills.
The young people were out in force, mostly dressed in black, with T-shirts celebrating punks and headbangers from an earlier age. Salamandra is one of Paraguay's top bands, playing Latin Rock, which is a far cry from the romantic lilt of Paraguayan harp and guitar. But, like everyone else, these semi-Goths carry their mate kit. For all Paraguayans, mate remains the social custom; they share the bitter tea, hot or cold (called tereré), through a silver straw from a cup filled constantly from a thermos. Usually the thermos is encased in tooled leather and the cup sits in a clasp on the side.
I had been woken at 6am by another type of music: drummers practising. I guessed that they were related to a demonstration in the Plaza Uruguaya by La Coordinació* de Jóvenes Campesinos, pressing for better treatment for young, rural workers. Green flags waved and a woman with a megaphone called stirring exhortations in Spanish and Guaraní.
In the same plaza, indigenous Indians have a tent village of black and yellow plastic, cooking fires and laundry in front of the San Roque railway station (built in 1856 for the first passenger train service in South America, and until recently providing a steam-hauled link to the south of the country). Swindled out of their land and way of life, they have set up camp to press the government for a return of their rights.
In downtown Asunción, Indians implore you to buy woven bags and women sell orchids from trays they balance on their heads. They compete with the more professional sales techniques of the handicraft sellers in the paseo artesanal on the Plaza de los Héroes, the banks of stalls on Calle Palma and booths in the Tourist Office, offering intricate ñandutí lace, wood carvings, and items for the mate ritual. On the same streets are businesses selling PlayStation games.
Half an hour east of the centre, you come to the upmarket malls of Villa Mora, with national and international brands in air-conditioned shops. Here, too, are the best restaurants and chains such as TGI Friday's.
The juxtaposition of old and new sits easily in the city, like the wooden ferry across Asunció* Bay to Chaco-í on the river Paraguay, chugging in front of the Paraguayan navy's sole warship and the luxury river cruiser, Crucero Paraguay – which takes passengers on three-day trips to the Pantanal. The latest Japanese and Korean cars battle for space on the streets with ancient, gear-crashing city buses.
On arrival, I took a taxi from the bus terminus. I asked for a particular hotel and the driver said "OK". At a red traffic light, he opened the newspaper. He wasn't whiling away the time, he said. The hotel I had asked for had had its power turned off that morning by the authorities. Now, it's common practice in many places for taxi drivers to say that your hotel is closed, expensive, or bad, as a ruse to take you somewhere where they are paid commission. Yet there it was in the ABC Color newspaper: the hotel owner was accused of stealing electricity from the grid.
So I did something that I know from decades of travelling through South America you should never do – and asked the driver if my second choice was worthy of recommendation. It turned out fine.
Travel essentials: Paraguay
* With no direct flights from the UK to Paraguay, consider TAM (020-8897 0005; tam.com.br) from Heathrow to Sao Paulo in Brazil, then on to Asunción. Aerolineas Argentinas (0800 096 9747; aerolineasargentinas.com) flies via Buenos Aires.
* Granados Park, Asunción (00 595 21 497 921; granadospark.com.py).Doubles start at US$149 (£99), room only.
* Hotel Westfalenhaus, Asunción (00 595 21 292 374; westfalenhaus.com). Doubles start at US$118 (£79), including breakfast.
* Black Cat Hostel, Asunción (00 595 21 449 827; blackcathostel.com). Doubles start at US$40 (£27), including breakfast.
* Hotel Austria, Ciudad del Este (00 595 61 504 213; www.hotelaustriarestaurante.com). Doubles start at US$50 (£33), B&B.
* CDE Backpackers, Ciudad del Este (00 595 983 990 228; www.cdebackpackers.com). Dorm beds from US$17 (£11), including breakfast.
* Paraguay Tourist Board: 00 595 21 494110; www.senatur.gov.py
* Population: 6,500,000
* Capital Asunción
* Area: 20 times the size of Wales
* Year of independence: 1811
* National animal: Pampas fox
* Opening lines of national anthem: Alos pueblos de America, infausto tres centurias un cetro oprimio (For three centuries a reign oppressed the unhappy peoples of America)