What Is the Uruguayan Peso (UYU)?
The Uruguayan Peso (UYU) is the national currency of Uruguay. It was first introduced in 1993, replacing Uruguay’s previous currency, the nuevo peso. It is denoted using the symbol “$”.
The UYU’s banknotes are available in denominations of $20, $50, $100, $200, $500, $1000, and $2000. Its coins are available in denominations of $1, $2, $5, and $10.
- The Uruguayan Peso (UYU) is the national currency of Uruguay.
- It was introduced in 1993 in the midst of an inflationary crisis.
- Although Uruguay’s economy has struggled in recent decades, its inflation has subsided in recent years and the country has achieved high levels of economic development.
Understanding the UYU
The Uruguayan Peso (UYU) began circulation in 1993, prompted in part by the country’s persistent struggles to combat inflation. Following World War II, Uruguay was forced to devalue their currency twice. In 1975, they adopted the “nuevo peso”, exchanging 1000 units of their previous currency for every 1 unit of the nuevo peso. In 1993, the country had to repeat this process a second time, once again replacing their currency on a 1000-to-1 basis. Through this second devaluation, Uruguay abandoned the nuevo peso and adopted the UYU, which it continues to use today.
These longstanding issues with inflation have posed a challenge to Uruguay’s efforts to develop economically. Between 1984 and 1998, for instance, the country experienced double-digit inflation in every single year, exceeding 50% in many years and reaching a peach of over 112% in 1990. Thankfully, inflation has declined significantly in recent years, ranging between 4.5% and 9% per year between 2005 and 2020.
Part of Uruguay’s economic problems can be attributed to the severe depression experienced by its neighbor, Argentina between 1999 and 2002. Because Uruguay and Argentina are close trading partners, this depression had a significant effect on the economy of Uruguay, with unemployment reaching over 20% during the period. Inflation likewise spiked to nearly 20% during this time, but receded shortly thereafter.
Real World Example of the UYU
In recent years, the value of the UYU has varied substantially when compared to the U.S. dollar (USD). In 2003, for instance, the UYU was valued at around $0.035 USD, but rose to roughly $0.05 USD in 2008, 2010, 2011, and 2012. Since 2012, the UYU has declined relative to the USD, reaching a low of $0.022 in March 2020.
Like all national currencies, the strength of the UYU is heavily influenced by its underlying economy. In the case of Uruguay, tourism and commodity products such as wood pulp, beef, and soya beans make up a substantial portion of total exports. By far the largest customer of Uruguay’s exports is China, comprising over 19% of all purchases. Uruguay’s neighbor, Brazil, is the country’s second largest customer, with roughly 16.1%. With a per-capita gross domestic product (GDP) of approximately $22,400 USD, Uruguay is considered a high-income country. The nation also ranks highly in measures such as life expectancy, literacy, and other quality of life indices.