5 Pounds – Egypt

By 1982, Egypt was navigating a complex and challenging currency situation, a direct legacy of the economic policies of the 1970s under President Anwar Sadat. The "Infitah" (Open Door) economic liberalization policy, initiated in 1974, had moved the country away from Gamal Abdel Nasser's state-controlled model. While attracting foreign investment, it also led to a proliferation of multiple exchange rates, creating a distorted and inefficient system. The official rate was fixed at an overvalued level (approximately E£0.70 to US$1), but a thriving black market, where the Egyptian pound traded at a significant discount, reflected the currency's true market weakness and fueled inflation and corruption.

The government maintained strict exchange controls, with access to the favorable official rate restricted primarily to imports of essential goods like food and medicine. Most other transactions, including those by the private sector and for non-essential imports, were forced to use the much less favorable "parallel" or black-market rates. This dual system created major bottlenecks for business, encouraged rent-seeking, and led to frequent shortages of foreign currency for legitimate commercial needs. The overvalued official pound also made Egyptian exports less competitive on the global market, worsening the country's trade deficit.

This unsustainable monetary environment was a key factor pushing the government toward a major economic reckoning. In the years following 1982, pressure from the International Monetary Fund (IMF) and other international creditors, concerned with Egypt's mounting debt, would intensify. These pressures culminated in the pivotal 1987 IMF agreement, which mandated a series of structural adjustments, including the first significant devaluation of the Egyptian pound and a move toward unifying the chaotic exchange rate system—a painful but necessary step to address the deep-rooted imbalances of the previous decade.