1 Centavo – Dominican Republic

In 1984, the Dominican Republic was navigating a precarious economic landscape dominated by a severe foreign exchange crisis and a deeply unstable currency regime. The country operated under a complex system of multiple exchange rates, a common tool in Latin America at the time to manage balance of payments pressures. The Central Bank maintained an overvalued official rate for priority imports and debt servicing, while a parallel "free market" rate, where the Dominican peso (DOP) was significantly weaker, reflected the true market scarcity of US dollars. This disparity fueled a thriving black market, creating distortions, encouraging capital flight, and breeding corruption as access to cheap official dollars became a privilege.

The root causes of this crisis were multifaceted, stemming from the oil price shocks of the 1970s, high global interest rates, and a legacy of expansive public spending that led to substantial external debt. By the early 1980s, the government of President Salvador Jorge Blanco was under intense pressure from international creditors, particularly the International Monetary Fund (IMF), to implement austerity measures and structural reforms. A key demand was the unification and devaluation of the peso to restore competitiveness and unlock crucial financing. However, any move to formally devalue the currency was politically and socially explosive, threatening to trigger immediate inflation and public unrest.

Consequently, 1984 was a year of mounting tension and economic stagnation, caught between the unsustainable past and a painful impending adjustment. The currency situation symbolized the broader economic dysfunction, with businesses struggling to obtain dollars for imports and widespread uncertainty paralyzing investment. The pressures culminated in April 1984 with the signing of a standby agreement with the IMF, which set the stage for a major, and ultimately controversial, currency devaluation the following year. Thus, the currency regime of 1984 represented the final, strained chapter of an exhausted policy model, immediately preceding a wrenching neoliberal transition.