2½ Lira – Turkey

In 1960, Turkey’s currency situation was characterized by a tightly controlled and overvalued Turkish lira within a complex multi-tiered exchange rate system. The government, prioritizing industrialization and import-substituting policies, maintained an official parity of 2.80 lira to the US dollar. However, this rate was largely symbolic for trade, as a series of "effective rates" and surcharges applied to different categories of imports and exports, creating a de facto devaluation to encourage specific sectors. This intricate web of rates, managed by the Central Bank and various committees, aimed to direct scarce foreign exchange toward capital goods and raw materials while discouraging consumer imports.

This system emerged from the economic pressures of the post-World War II era and the Democratic Party's expansive spending in the 1950s, which led to persistent trade deficits and dwindling foreign exchange reserves. By the end of the decade, inflation was rising, and the currency was under severe strain. The economic turmoil contributed to political instability, culminating in the military coup of May 27, 1960, which overthrew the Menderes government.

The new military-backed administration inherited this precarious monetary situation and recognized the need for reform. While immediate, radical change was not implemented in 1960 itself, the year was a pivotal turning point. The government began laying the groundwork for a major economic stabilization program, which would eventually materialize in 1961-62. This included moves toward simplifying the exchange rate regime and seeking assistance from international organizations like the OECD and IMF, setting the stage for a significant devaluation of the lira in the years immediately following.