The nuevo sol is the official currency of the Republic of Peru. This decimal currency is subdivided into 100 centimos. The name of the currency translates literally from Spanish as new sun. It is called the nuevo, or new, sol because it is the reintroduction of Peru’s former currency, which was abandoned in the 1980s due to hyperinflation. The nuevo sol was introduced in 1991, and since this time, the government and the Central Reserve Bank of Peru have been able to keep inflation at an average annual rate of only 1.5 percent.
The sol was introduced as the currency of Peru in 1863 as the first decimalised currency of the country. It was pegged to the French franc at a rate of 1 sol: 5 francs. After a period of hyperinflation in the 1980s, the sol was replaced by the inti in 1985 at a rate of 1 inti: 1000 soles. The introduction of the inti, which was named after the Incan sun god, did little to stop inflation. In the second-half of the 1980s, inflation dramatically increased, necessitating the introduction of a new currency, the Nuevo sol, in 1991 at a rate of 1 nuevo sol: 1 million intis. Then nuevo sol has been remarkably stable since this time, attracting many new foreign investors to Peru.
The issuing authority of the nuevo sol is the Central Reserve Bank of Peru, which was first established in 1922. Although its powers were limited for most of the 20th century, the central bank was modernized beginning in 1993.
The economy of Peru is still developing, even though it has a relatively high Human Development Index score. Until recently, the country’s economy has been dependent on exports, which have done much to raise the GDP but little to create a more open market economy and a fair distribution of income. It is estimated that over 31 percent of the population lives below the poverty level. In the past, most companies in Peru were state-owned, but they have since been privatised during sweeping economic reforms in the 1990s. Today, 53 percent of the GDP of Peru comes from the services sector. Manufacturing is the second leading sector, making up 22.3 percent of the GDP, followed by mining at 15 percent. The main exports of the country are gold, zinc, copper and textiles.