5 Centavos – Dominican Republic

In 1989, the Dominican Republic was in the final stages of a profound economic transformation initiated under President Joaquín Balaguer, who had returned to power in 1986. The country was grappling with the severe legacy of the 1980s debt crisis, characterized by high inflation, fiscal deficits, and a heavily controlled and overvalued currency. The official exchange rate for the Dominican peso (RD$) was fixed by the Central Bank, but a vast and influential parallel black market for US dollars thrived, reflecting a significant loss of confidence in the national currency and creating major distortions in the economy.

That year, the government, under pressure from the International Monetary Fund (IMF) and World Bank as part of structural adjustment programs, began implementing decisive stabilization and liberalization measures. A critical step was the move towards a unified, market-driven exchange rate system. In July 1989, a major devaluation was enacted, pushing the official rate closer to the black-market level, which was a painful but necessary step to correct imbalances. This was part of a broader package that included fiscal austerity, reduction of import tariffs, and lifting price controls on many basic goods.

The currency situation of 1989, therefore, represents a pivotal turning point. The devaluation and the shift away from a fixed exchange rate regime aimed to restore competitiveness, boost exports (particularly from the free trade zones), and attract foreign investment. While these reforms laid the foundation for the macroeconomic stability and growth the Dominican Republic would experience in subsequent decades, they came at an immediate social cost, exacerbating poverty and triggering public discontent due to soaring prices for imported goods and essential commodities in the short term.