5 Pesos – Uruguay

In 1965, Uruguay was in the midst of a prolonged period of economic stagnation and political tension, a phase that would later be termed the "Uruguayan Crisis." The country's traditional economic model, heavily reliant on agricultural exports like wool and beef, was struggling. A key symptom and cause of this malaise was a severe and persistent currency crisis. The Uruguayan peso was under immense pressure, suffering from chronic devaluation and rampant inflation, which eroded purchasing power and created widespread economic uncertainty.

This currency instability was fundamentally linked to deep structural problems. The state had expanded dramatically through a vast welfare system and a bloated, inefficient public sector, leading to large fiscal deficits. These deficits were increasingly financed by the Central Bank, effectively printing money, which directly fueled inflation. Furthermore, a complex system of multiple exchange rates (a "crawling peg" system with various tiers) was used in an attempt to manage the peso's value, control capital flight, and protect certain sectors. However, this system created distortions, encouraged speculation, and failed to halt the loss of foreign reserves.

The currency turmoil of 1965 was not an isolated event but a critical chapter in a downward spiral. It exacerbated social unrest, contributed to the decline of the once-stable "Switzerland of South America," and set the stage for the severe political and economic upheavals that would culminate in the 1973 civic-military coup. The inability to stabilize the peso reflected a broader failure to adapt the national economy to changing global markets and internal fiscal realities.