The Uruguayan Peso (UYU) is the official currency of the Republic of Uruguay. It was named the official currency in 1896 and the current version of the currency was adopted in 1993. The Uruguayan peso is divided into 100 centesimos (cents) although there are no cents in circulations. The banknotes feature the portraits of prominent Uruguayans such as Dámaso Antonio Larrañaga and Juan Zorilla de San Martin while the country’s landmarks including the Varela Monument and the National Library are featured on the reverse. The notes are watermarked by the portrait of the country’s founding father and revolutionary leader José Gervasio Artigas.
Introduction of the Uruguayan Peso
By 1896, Uruguay had obtained the monetary stability based on gold standards, the currency remained stable until World War I began and the prices of gold became unpredictable. World War II worsened the situation as the global economy became unstable. Uruguay was hit by inflation that became severe in 1964 and critical in 1970. In July 1975, the peso was replaced by the Nuevo peso at the rate of 1000 pesos. However, the new currency failed to slow the inflation as anticipated prompting the government to issue a new version of the currency in 1993 at a rate of 1,000 old pesos to one new peso.
Volatility and Inflation
After the Second World War, the Uruguayan economy suffered from persistent inflation that slowed recovery. At the start of the 20th century, Uruguay was a mass exporter of wool and beef to neighboring countries and the trade allowed the state to control the distribution of wealth until the 1950s when agricultural exports slowed. The public sector replaced the export-based economy and the government no longer earned foreign exchange. The economy stagnated as high tariffs on imports weighed down on the currency. The Uruguayan peso lost value against the US dollar and the country faced a budget deficit that it could not recover. Several industries collapsed as large producers monopolized production. The US dollar became the go-to currency for large purchases and the economy was on the brink of being dollarized before the government stepped in and introduced the new currency.
Peso Notes and Coins
In 1994, Uruguay introduced the 10, 20, and 50 brass centesimos and the 1 and 2 brass pesos. The 5 and 10 pesos were introduced in 2000. The coins replaced all notes of similar value. In 2010, the 50 centesimos coin was removed from circulation. The 20 and 50 peso coins were later withdrawn leaving the 1, 2, 5, and 10 pesos coins in circulation. Between 1995 and 1996, banknotes of 5, 10, 20, 50, 100, 200, 500, and 1,000 pesos were introduced but the 5 and 10 pesos were withdrawn in 2003. In the same year, the 2,000 pesos note was introduced.