5 Milliemes – Egypt

By 1975, Egypt's currency situation was characterized by the severe strains of the Infitah (Economic Open Door Policy) launched by President Anwar Sadat in 1974. This policy aimed to liberalize the state-dominated economy, attract foreign investment, and pivot away from Soviet influence towards the West. However, a critical and immediate problem was the existence of a complex multi-tier exchange rate system. The official rate was fixed at an overvalued Egyptian Pound (EGP) to the US Dollar, which was used for government transactions and imports of essential goods like food and fuel. Alongside this, a parallel "own-exchange" rate and a thriving black market reflected the currency's true, much weaker value, creating distortions, encouraging corruption, and deterring honest foreign investment.

The root causes of this instability were profound. Years of costly conflict, including the 1973 war, massive subsidies on basic commodities, and a bloated public sector had led to persistent budget deficits, high inflation, and a growing balance of payments crisis. Foreign reserves were critically low. The overvalued official rate acted as an implicit tax on key exports like cotton, making them uncompetitive, while making imports artificially cheap, which drained reserves further. This unsustainable system created severe shortages of foreign currency for the private sector, stifling the very economic activity the Infitah sought to promote.

Consequently, 1975 was a pivotal year of mounting pressure that forced initial, hesitant reforms. Under guidance from the International Monetary Fund (IMF), which Egypt began engaging with in 1974, the government took its first steps toward unification. It introduced a more flexible "parallel" rate for non-essential imports and certain transactions, effectively a controlled devaluation. This move acknowledged the market reality and was a precursor to the more significant devaluations and structural adjustments that would follow later in the decade, setting Egypt on a long, difficult path toward currency liberalization and economic restructuring.