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The national currency of Uruguay is the peso uruguayo or Uruguayan Peso, which is subdivided into 100 centesimos. Its currency code is UYU and its international currency symbol is $U.
The Uruguayan Peso replaced the former currency, the nuevo peso, on March 1, 1993 after a period of high inflation. At that time, 1000 nuevo pesos could be exchanged for one Uruguayan Peso. The Uruguayan government has performed a similar currency exchange once before. In 1973, the ‘old’ peso, which was at that time the national currency, could be exchanged for the nuevo peso at a 1000:1 rate. This policy was instituted as a result of high inflation experienced after World War II.
Although the Uruguayan government has experimented with various methods of fixing the value of the Uruguayan Peso to the United States Dollar at various times throughout the late 1900s, in 2002 the currency was allowed to float against the USD, and this policy continues today. At first, the currency lost much of its value. However, starting in about 2004, the $U began to appreciate against the USD and regained much of the value it had lost initially.
The currency now tends to hover around 19 $U per USD. However, perhaps due to the high degree of historical volatility, Uruguayans still denominate many high-end items such as houses and cars in USD. It is the hope of the Uruguayan government that the relatively recent policy change to allow the $U to float against the USD will help to reduce the ‘dollarization’ of the economy.