UYU (Uruguayan Peso)

The UYU (Uruguayan Peso) is the national currency of the Oriental Republic of Uruguay, named such since 1896, while the current version of the peso has been in circulation since 1993. Each banknote denomination features the portrait of a prominent Uruguayan, including poet Juan Zorilla de San Martin and the priest/scientist Dámaso Antonio Larrañaga. Landmarks such as the National Library and the Varela Monument are on the reverse. Each note has a watermark portrait of the revolutionary leader, José Gervasio Artigas, often referred to as the Father of Uruguay.

The Uruguayan peso (UYU) began circulation in 1993, but the term peso to indicate money exists since 1896, after the country achieved monetary stability by adopting the gold standard. Indeed, the term peso can trace back to Spanish colonial rule. Stability from the change to the gold standard continued until inflation set in following World War II. The rise in prices persisted and forced the national government to introduce a new version of the peso, el nuevo peso, at an exchange rate of one new peso to 1000 of the old.

The Nuevo peso failed to slow Uruguayan inflation, prompting the government to issue a second new peso divisible into 100 centésimos. In 1993, The exchange was at the same rate as the previous currency change of 1000 old peso to one new peso. This issue continues to be the national currency.

In 1994, the government introduced coins in denominations of 10, 20 and 50 centésimos. Over the following two years, circulation of banknotes ranging from 20 to 2000 pesos began. 

The post World War II history of the peso demonstrates the persistent inflation that has stricken Uruguay. Early in the 20th Century, Uruguay’s economy opened to its neighbors, deriving power from exports of wool and beef in particular. The government used this trade income to control the distribution of wealth and worker payments until the 1950s when agricultural trade slowed. In the place of this export-based activity, the public sector became the primary employer in Uruguay. 

Tariffs on imports were high, and the closed economy stagnated under massive deficits driven by public spending and over-reliance on a small number of industries dominated by a few large producers. The relationship of the Uruguayan peso to the U.S. dollar (USD) also drives instability. Over the entire 20th century, the peso has depreciated against the dollar. 

Volatility during this same period comes from the government periodically pegging the peso’s exchange rate against the dollar. As the peso declines in value, the USD has become the go-to currency for large purchases within the country, including real estate, automobiles, and heavy equipment. 

Some see this as the dollarization of the Uruguayan economy. The 21st Century has seen an appreciation of the Uruguayan Peso in relationship to the USD, making exports more expensive and disrupting manufacturing industries.

The Oriental Republic of Uruguay declared independence from Brazil in 1825, but this freedom did not receive recognization until three years later. The country sits on the Atlantic Ocean coast of South America and has the reputation of being one of the most liberal countries of the world.

Between 1999 and 2002, the economy suffered as neighbor Argentina experienced a depression. The country is one of two South America nations to have investment-grade government bonds. Exports center around cattle, soybean, and wood pulp products. According to the 2017 World Bank data, Uruguay is a high-income economy and experiences an annual growth in the gross domestic product of 2.7% with an inflation deflator of 4-percent.