The Currency of a Sun-Obsessed People Gets Fitting Name Changeby
Peru's new sun will become the sun after years of stability
Billions in hard cash in the economy will have to be replaced
The Peruvians have a thing for the sun.
Their first currency, created back in the mid-1800s, was the sol (Spanish, of course, for sun), which was followed by the sol de oro (the sun of gold) and then in 1985 by the inti (an indigenous word for, you guessed it, the sun). When hyperinflation wiped out the value of the inti a few years later, it was time for another sun. The nuevo sol, it was called, as if to say "don’t confuse this new sun with all those old suns."
Twenty-four years later, though, this sun isn’t really new anymore, either. So in what is this time a symbol of the great success the country has had in taming inflation and maintaining the currency’s purchasing power, authorities are changing the name once again. Congress approved legislation last month to officially drop the word nuevo, making it simply the sol. President Ollanta Humala signed off on the change over the weekend.
“It’s absurd to keep calling it new,” said Victor Andres Garcia Belaunde, a lawmaker who helped spearhead the initiative. “After almost 25 years, there’s little or nothing new about it.’’
Other countries forced to rechristen their currencies over the years with the word "new" were a lot quicker to drop it once the economy stabilized. Three years after the nuevo peso was created in 1993, Mexico cut the first word. And France’s nouveau franc became the franc shortly after its 1960 revaluation. But Peru has stubbornly hung onto the full name well after inflation sank from 7,650 percent a year to below 5 percent. No major country in Latin America has had a lower inflation rate over the past 15 years.
Peruvians’ reverence for the sun dates back centuries. Under the Incas, who ran their sprawling South American empire from a base in the Andean highlands, the sun was considered the highest deity. After the country won its independence from Spain years later, the first sol coins ever minted bore a picture of a blazing sun, a symbol also chosen initially in neighboring Bolivia and Argentina, according to Manuel Villa-Garcia, a former president of Peru’s Numismatic Society.
No one really calls the currency the nuevo sol nowadays. (Bloomberg News hasn’t referred to it that way in years.) To most Peruvians, it’s just the sol. But formally dropping that one little word may not be as simple as it sounds. For starters, the government will need to replace 38 billion soles ($11 billion) in hard cash in the economy to reflect the change. To spread out the cost over several years, a small portion of bills and coins will be replaced at a time, Garcia Belaunde said.
That slow roll-out could create confusion in a nation where counterfeit bills are common, said Dennis Rider Owen, who operates a foreign-exchange outlet in Lima.
“The average Peruvian won’t understand there are two types of sol bills,’’ he said. “Why go to all that trouble to do away with a name that most people never use anyway?”
The answer to that, Garcia Belaunde said, is it will reduce accounting and legal headaches. It’s not uncommon for contracts to be written up using the informal name rather than the official title, rendering the documents invalid, he said. Alexandra Quincot, a lawyer in Lima’s financial district, has run into this problem many times. She’s in favor of the change. "It makes sense to bring it up to date," she said.