2000 Nuevos Pesos – Uruguay

By 1984, Uruguay was emerging from over a decade of brutal military dictatorship (1973-1985), and its currency situation was characterized by profound instability and a legacy of economic mismanagement. The period was marked by the coexistence of multiple exchange rates—an official, heavily overvalued peso used for essential imports and debt servicing, and a parallel black market where the peso traded at a fraction of its official value. This dual system created severe distortions, encouraged capital flight, and reflected a lack of confidence in both the currency and the regime's economic policies. High inflation, though lower than in some neighboring countries, remained a persistent problem, eroding purchasing power and savings.

The economic backdrop was one of deep crisis, with the country grappling with the effects of the Latin American debt crisis that had erupted in 1982. Uruguay's foreign debt was unsustainably high, and a series of devaluations had failed to correct fundamental imbalances. The overvalued official peso crippled the export sector, while the Central Bank's reserves were perilously low. The financial system was fragile, with many institutions technically insolvent. This currency instability was both a cause and a symptom of a broader economic contraction, with stagnant growth and high unemployment plaguing the nation.

The currency turmoil of 1984 was intrinsically linked to the political transition. As the military government began negotiated steps toward democracy, it lacked the political legitimacy to implement the harsh austerity and unified devaluation measures required for stabilization. Consequently, managing the chaotic currency system fell to the incoming civilian administration, which would take office in 1985. The situation thus set the stage for one of the first major challenges for Uruguay's restored democracy: implementing a coherent exchange rate and stabilization policy to rebuild confidence and lay the foundation for future economic recovery.