10 Senti – Somalia

In 1976, Somalia's currency situation was characterized by the exclusive circulation of the Somali shilling (SOS), which had been introduced in 1962 to replace the East African shilling. The currency was managed by the Central Bank of Somalia, and its value was officially pegged to the U.S. dollar at a fixed rate of 6.925 shillings to one dollar, a parity maintained since 1967. This peg provided a measure of stability for international trade and was part of a broader economic framework aligned with the socialist-oriented policies of President Siad Barre's military government, which had taken power in 1969.

Economically, the fixed exchange rate was increasingly difficult to sustain. The country faced significant fiscal pressures due to heavy state spending on military campaigns, public sector expansion, and ambitious development projects, often supported by foreign borrowing. While the official rate persisted on paper, underlying weaknesses—including a growing budget deficit, inflationary pressures, and a limited diversity of exports beyond livestock and bananas—began to strain the shilling's real value. These fundamentals suggested a currency that was overvalued at its official peg, creating distortions in the economy.

Consequently, a parallel black market for foreign exchange, primarily U.S. dollars, began to emerge and grow in significance. This market operated at a substantial premium to the official rate, reflecting the true market demand for hard currency and the scarcity created by the country's economic imbalances. Thus, by 1976, Somalia effectively had a dual-currency system: an increasingly artificial official rate used for government transactions and a more vibrant black-market rate that dictated the actual cost of imports and reflected the growing strains on the national economy, foreshadowing the deeper financial difficulties to come in the following decade.