Uruguay’s Central Bank Puts Dollar Intervention Back on the Table

Key Points

• A 100-basis-point cut took the benchmark rate to 6.5%, with FX intervention on the table.
• Officials now worry inflation could slip under 3%, below the target band.
• Liquidity strains and abrupt moves drive the warning.

Uruguay’s central bank is preparing to act if the dollar keeps weakening locally. Governor Guillermo Tolosa said the BCU will intervene if FX trading does not normalize.

“Uruguay is not an island,” Tolosa said, linking the move to renewed dollar weakness worldwide. He also cited seasonal dollar supply tied to the tourism season and a stronger preference for holding pesos.

The message arrived with an unusually large policy cut. The BCU reduced its benchmark rate by 100 basis points to 6.5%. It also moved up a meeting that had been scheduled for February 12.

Tolosa said some state-linked players have treated current levels as attractive and carried out sizable dollar purchases. The bank hopes those operations restore two-way trading.

If they do not, the BCU says it will step in to normalize market functioning and avoid abrupt jumps. That would be a rare return to direct FX action.

The BCU last intervened on August 31, 2021, buying about $31.2 million to limit peso appreciation. Behind the signal is an inflation problem running in reverse.

Uruguay targets 4.5% inflation, with a tolerance range of 3% to 6%. The BCU now sees risks inflation could fall below 3%. Consumer inflation has stayed inside the band for 31 consecutive months.

Inflation ended 2025 at 3.65%, below expectations and below the bank’s own projection. The dollar rose 1% on the day to an interbank average of 37.831 pesos ($1.00).

BEVSA reported 121 trades totaling $63 million, with prices between 37.70 pesos ($1.00) and 38.00 pesos ($1.00). Even so, the dollar is down 3.1% in 2026, after falling 11.4% in 2025.

Last week it hit its lowest nominal level since July 31, 2023. At Banco República, it was 36.60 pesos ($0.97) to buy and 39.00 pesos ($1.03) to sell.

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