UYU - Uruguayan Peso

Uruguayan Peso overview

The Uruguayan Peso (UYU) is the official currency of Uruguay, introduced in 1993 to replace the Nuevo Peso in an effort to stabilize the country’s economy after a period of inflation.

The currency is managed and issued by the Central Bank of Uruguay (Banco Central del Uruguay). The Uruguayan Peso is subdivided into 100 centésimos, although coins for lower denominations are rarely used in everyday transactions.

The Uruguayan Peso is used in all domestic transactions and is traded on the international foreign exchange markets, where its value fluctuates based on various economic factors, including inflation rates, interest rates, and global market trends. Despite the dollarization of many sectors, particularly in banking and international trade, the Peso remains the primary legal tender in Uruguay.

History of the Uruguayan Peso

Uruguay began efforts to establish a national currency system in 1828. However, due to economic difficulties and complex social conditions, creating a stable monetary policy for the market was nearly impossible at that time.

In 1831, the government decided to withdraw all foreign currencies in coin form to address the issues in the trade system. On March 14 of the same year, a new law was enacted allowing the issuance of Uruguay’s first currency, called the “décimos of Buenos Aires City,” which was equivalent to one-tenth of the Buenos Aires real.

It wasn’t until 1862 that Uruguay officially had its own currency. At that time, several different metal coins were in circulation, many of which had depreciated significantly. On June 23, 1862, the government established a currency system based on silver and gold. This is when the peso plata (silver peso) was introduced, worth three-quarters of an ounce of silver, replacing the old peso corriente.

Later, during the presidency of Venancio Flores, banks in Uruguay were authorized to issue their own money.

In 1896, the Bank of the Republic of Eastern Uruguay was established and took responsibility for issuing currency. In 1967, this responsibility was transferred to the Central Bank of Uruguay, which has since been the sole authority for issuing Uruguay's official peso.

The value of the Uruguayan Peso (UYU) fluctuates against the US Dollar (USD). In 2003, the UYU was valued at about $0.035 USD, later rising to nearly $0.05 USD in 2008, 2010, 2011, and 2012. However, since 2012, the UYU has depreciated against the USD, reaching its lowest point of $0.022 USD in March 2020. The value of the UYU clearly reflects the domestic economic situation, as well as challenges from external factors like fluctuations in trade and exchange rates.

Uruguayan Peso denominations

The Uruguayan Peso comes in two forms: banknotes and coins, fully meeting the payment needs for both small transactions and large-scale exchanges in the economy.

Uruguayan banknotes

Uruguayan banknotes include denominations of:

• $20: Used for small transactions, featuring national symbols

• $50: Common for everyday purchases, reflecting the country’s heritage

• $100: A higher denomination, often used for larger purchases

• $200: Frequently used for medium to large transactions, featuring iconic figures

• $500: A significant bill, often for high-value transactions

• $1000: Common in business dealings and larger exchanges

• $2000: The highest denomination, used for major transactions

These banknotes are not only highly functional but are also designed with images that symbolize the country, reflecting its rich cultural and historical heritage. They are typically used in large transactions or situations requiring significant amounts of money.

Uruguayan coins

The coin system plays an important role, with smaller denominations such as:

• $1

• $2

• $5

• $10

These coins are commonly used in daily transactions like small shopping purchases or paying for services, providing convenience in everyday life.

Both the banknotes and coins of Uruguay are designed to be durable and secure, representing a harmonious blend of practicality and cultural value, contributing to the stability and development of the national financial system.

Exchange rate of the Peso

The Uruguayan Peso (UYU) is the official currency of Uruguay, and its exchange rate against the US Dollar (USD) fluctuates frequently. According to data from Wise, on November 25, 2024, 1 USD was equivalent to approximately 42.915 UYU.

Over the past year, the UYU/USD exchange rate reached its highest at 0.02664 USD on March 28, 2024, and its lowest at 0.02329 USD on November 18, 2024, reflecting a depreciation of about 7.81% of the Uruguayan Peso against the US Dollar. This volatility highlights the economic challenges Uruguay is facing, including inflation and fluctuations in international markets.

In the context of globalization, the Uruguayan Peso faces multiple challenges. Economic fluctuations globally and policy changes in major trading partners such as China and Brazil can impact the Peso’s value, especially as Uruguay's exports rely on products like beef, timber, and soybeans. Changes in these countries put pressure on the Peso's exchange rate against other currencies.

Nevertheless, the Uruguayan Peso remains crucial in the national economy. The government of Uruguay is working to maintain the Peso’s value stability through financial reforms and increased international trade. These efforts help boost investor confidence and improve the currency's purchasing power in the future. Despite ongoing challenges, the government remains committed to building a sustainable economy and improving the quality of life for its people