Uruguayan peso

From Freepedia

The peso (ISO 4217 code: UYU) is the official currency unit of Uruguay. It is subdivided into 100 centésimos. The UYU Uruguayan peso (peso uruguayo) replaced the new Uruguayan peso (nuevo peso uruguayo; ISO 4217: UYN) on March 1, 1993 at the rate of 1,000 new pesos = 1 peso. The new peso in turn had replaced the old peso at a rate of 1,000 pesos = 1 new peso in November 1973.

Coins in circulation are: 10, 20, and 50 centésimo, and 1, 2, 5, and 10 peso. Banknotes in circulation are: 5, 10, 20, 50, 100, 200, 1000, 2000 peso

As of July 2005, the United States dollar was worth around 24 Uruguayan pesos; the Euro was worth around 30.

History

Uruguayans have become accustomed to the constant devaluation of their currency. Uruguayans refer to periods of real appreciation of the currency as atraso cambiario, which literally means that "the exchange rate is running late". As a consequence of the instability of the local currency, prices for most big-ticket items (real estate, cars and even executives' salaries) are denominated in US dollars.

During the military rule the peso was pegged to the dollar (actually it was a crawling peg). A table of the future value of the dollar was published daily by the government (called the tablita). In 1982 the currency was devalued ("the tablita was broken"), throwing thousands of companies and individuals into bankruptcy. In the 1990s a new mechanism to provide predictibilty was introduced, this time in the form of a sliding range, with a top and bottom margins, at which the government would intervene. In 2002, after a banking crisis and amid a huge budget deficit, the currency was again allowed to float, losing almost 50% of its value in a couple of weeks, and, again, throwing into bankruptcy thousands of companies and individuals who held debts denominated in US dollars.

In 2004 a phenomenon completely new to most Uruguayans developed: the currency appreciated in nominal terms against the US dollar, going from 30 to 24 pesos to the dollar. This revaluation brought protests from the industrial sector, which felt that it lost competitivity. The government hopes that a floating currency will "de-dollarize" the economy.

Uruguay does not seem to have found a mechanism that provides the exchange rate some level of predictability, while at the same time allowing the country to adapt its prices so that its exports remain competitive.

Current UYU exchange rates

AUD | CAD | EUR | GBP | INR | NZD | USD