Euro climbs to 44.84 Uruguayan pesos, market volatility remains high

Over the past week, the euro has seen a slight decrease of 0.32%, while it has appreciated by 1.14% on an annual basis.

The exchange rate between the euro and the Uruguayan peso has been trending upward over the last two days. Current exchange rate volatility stands at 29.61%, significantly above the reference volatility of 16.88%, indicating instability in the foreign exchange market.

According to a recent survey by the Central Bank of Uruguay (BCU), projections for the Uruguayan dollar suggest a slight increase towards the end of 2026. The expected exchange rate for January 2026 is projected at 38.98 pesos per dollar, rising to 39.33 pesos by June. Analysts surveyed by the BCU anticipate the rate will reach 40.19 pesos by the end of 2026, following rates of 38.92 in January and 39.48 in June. Further out, projections estimate the US dollar could reach 41.46 pesos by the end of December 2027.

The survey also reveals expectations for moderate economic growth, with the Gross Domestic Product (GDP) projected to increase by 1.87% in 2026, 1.85% in 2027, and 1.92% in 2028. These figures represent a downward revision from previous estimates of 2.47% growth for 2026. Projections for this year range from 1.50% to 2.30%.

Inflation is expected to remain around 4.40% for 2026, rising slightly to 4.45% in 2027 and 4.50% in 2028, aligning with the BCU’s target range of 4.5%.

The Uruguayan peso has been the official currency since 1993, replacing older pesos after a period of high inflation. New banknotes were authorized by the Central Bank of Uruguay in October 1991 to replace the old pesos, which were equivalent to 1,000 new pesos. The currency officially began circulating in March 1993.

In the 1990s, a new mechanism was introduced to better predict the value of the peso against the dollar, establishing a floating band system. Later, in 2002, during Jorge Batlle’s presidency, Uruguay experienced a financial crisis due to capital flight, making it difficult to control the foreign exchange market. This led to a shift to an independent floating system, which remains in place today. Following the 2002 devaluation, the currency experienced a period of appreciation. Uruguayan banknotes feature animals and national symbols on the reverse side.

Uruguay is distinguished in Latin America for its high per capita income, low levels of inequality and poverty, with approximately 60% of its population classified as middle class. Current challenges include improving competitiveness and long-term growth, increasing women’s participation in economic activities, and transforming education.