Latin America’s “Switzerland” is gradually moving away from the dollar

For decades, saving in dollars seemed almost self-evident across Latin America. High inflation, repeated devaluations and financial crises taught people that keeping their wealth in national currencies could quickly destroy its value. Some countries went further and fully dollarized their economies.

Uruguay is now moving in the opposite direction. Economic and political stability, lower inflation and growing confidence in the central bank are gradually restoring trust in the peso. The dollar still dominates bank deposits, but saving in the national currency is once again being seen as a rational and potentially rewarding choice.

Uruguay’s reputation as the “Switzerland of Latin America” rests on its stable democratic institutions, rule of law, strong welfare system and relative prosperity. After crises, dictatorship and devaluations damaged that image, the country has recovered much of its former standing. Its per-capita income is about $27,600, while its risk premium is around 70 basis points, compared with almost 500 in Argentina.

The shift is visible in investment figures. Holdings in domestic peso-denominated securities tripled in two years, exceeding 14 billion pesos, or about $348 million, at the end of May. The proportion of private bank deposits held in foreign currency fell from about 73% in March 2025 to 69% in June 2026.

That share remains high, showing how strongly memories of past crises persist. But the direction has begun to change. Uruguay has kept inflation within the central bank’s 3% to 6% target for three years, and the International Monetary Fund expects it to remain near 4% in 2026.

The stability has encouraged new peso products. At least seven money-market mutual funds in the national currency operated in 2026, nearly twice as many as the previous year. Firms including Balanz and Puente, along with platforms such as Mercado Libre and Prex, now offer products to small savers. Some individuals are beginning to invest with as little as 1,000 pesos.