The Paraguayan Government has lifted the state of emergency which was imposed on Monday following violent protests in which two people were killed and many more injured.

President Macchi said the country had returned to normal

The measure was originally supposed to be in place for five days, but in a televised address President Luis Gonzalez Macchi said the country had already returned to normality.

The rioting erupted over calls for the president to quit amid a deepening economic recession.

Mr Gonzalez Macchi blamed the unrest on supporters of the former general and coup plotter Lino Oviedo, who is in exile in Brazil.

Protests die down

Mr Gonzalez Macchi said he regretted imposing the state of emergency, but added it had brought about "the full restoration of public order".

Two people were killed and more than a dozen injured on Monday in Paraguay's worst riots in three years.

During the two days of unrest, police fired rubber bullets and teargas at protesters.

But on Wednesday, officials said there were no major protests in the country and reports said police presence on the streets had been scaled down.

Economic stagnation

Speaking about the riots, the president accused General Oviedo of backing "seditious acts" from Brazil.

Footage broadcast on Brazilian television showed the former general haranguing a crowd against the Paraguayan Government at a rally last month just inside Brazil.

Correspondents say that while the protests do seem to have been well-orchestrated, there is little doubt that Paraguay's president is also increasingly unpopular.

The economy has either been stagnant or shrinking for the last seven years.

Many people have been taking their money out of the banks, worried they will collapse.

And analysts say Paraguay is particularly vulnerable to the economic woes of its much larger neighbours, Brazil and Argentina.