Uruguay raised US$ 2 billion from a dual-currency debt deal on Wednesday, issuing UYU47.1 billion (US$ 1.12 billion) in new inflation-linked, 20-year notes and adding US$ 400 million to its 4.375% 2031 bonds, plus a rescheduling of US$ 500 million in 2027, 2028 and 2030 Indexed Units.
The Central Bank of Uruguay (BCU) released the report of the country's quarterly economic situation, which reports that the Uruguayan economy grew by only 0.1% year-on-year and 0.3% in the second quarter of the year, compared to the first three months of the year, when it registered a 0.1% drop.
Moody's has lowered its outlook on Uruguay's (Baa2 negative) banking system to negative from stable on the expectation that asset risks will rise moderately as challenging economic conditions weigh on consumers and businesses alike, and profitability will decline.
Uruguay's central bank was forced to sell almost 65 million dollars on Tuesday, the highest volume so far this year, to keep the US dollar from ballooning as fears of the collapse of the Brazilian economy are felt through the region. The dollar finally ended trading with a slight 0.12% increase at 28,826 Pesos to the greenback.
Uruguay's economy is strong enough to navigate in a challenging global and regional environment in which the U.S. dollar is strong and inflation is starting to rise, Uruguayan Central Bank, (BCU), chairman Mario Bergara said during a conference in Montevideo where he discussed the central bank's mission in the current world environment.
Uruguay's fiscal deficit in the twelve months to August was equivalent to 3.3% of GDP, or 1.725bn dollars according to the latest release from the Economy and Finance ministry. However the primary deficit (before debt payments) was 202 million dollars or 0.39% of GDP.
Confirming ten years of sustained expansion the Uruguayan economy advanced 2% in the second quarter over the first quarter and 3.7% over the same period a year ago, according to the latest reports from the Central bank.
Uruguay's Central bank confirmed that inflation remains the leading challenge and ratified the current monetary contractive policy with the M1 money supply index converging to 8% from its current 10.4%, in a 'not too distant horizon'.
Uruguay's inflation index experienced a slight deceleration during the twelve months to June, from 9.18% in May to 9.08%, basically because of cheaper fresh food, frozen public utility rates including fuel, while a stabilized exchange rate for the US dollar with a strong Peso, helped with imported goods.
Uruguay's economy expanded 2.4% in the first quarter compared with the same 2013 period, but contracted 0.4% compared with the fourth quarter of last year, the central bank said this week. However deceleration is a fact since growth of the first quarter in 2013 has gone up 4.6% over 2012.