Brazilian real

Brazilian real
real brasileiro  (Portuguese)
Reais banknote of the latest series, announced February 2010. Issued on 13 December 2010.[1][2]
ISO 4217 code	BRL
Central bank	Central Bank of Brazil
Website	www.bcb.gov.br
User(s)	Brazil
Inflation	8.1%
Source	Central Bank of Brazil, 2013
Method	CPI
Subunit
1/100	centavo
Symbol	R$
Plural	Reais
Coins
Freq. used	5, 10, 25, 50 centavos, R$1
Rarely used	1 centavo (discontinued in 2006)
Banknotes
Freq. used	R$2, R$5, R$10, R$20, R$50, R$100
Rarely used	R$1 (discontinued in 2006)
Printer	Casa da Moeda do Brasil
Website	www.casadamoeda.gov.br
Mint	Casa da Moeda do Brasil
Website	www.casadamoeda.gov.br

The real (/reɪˈɑːl/; Brazilian Portuguese: [ʁeˈaw]; pl. reais) is the present-day currency of Brazil. Its sign is R$ and its ISO code is BRL. It is subdivided into 100 centavos ("Cents").

The modern real was introduced in 1994, when it replaced the old currency, the cruzeiro real, as part of the Plano Real, a substantial monetary reform package that aimed to put an end to three decades of rampant inflation. At the time it was meant to have approximately fixed 1:1 exchange rate with the United States dollar. It suffered a sudden devaluation to a rate of about 2:1 in 1999, reached almost 4:1 in 2002 and then partially recovered until the domestic economic crisis of 2015. The exchange rate as of September 2015 was BRL 4.05 to USD 1.00.By the end of the year, it had a little recover and was 3.8 reais per dollar.

The dollar-like sign (cifrão) is the currency's symbol (both historic and modern), and in all the other past Brazilian currencies, is officially written with two vertical strokes () rather than one.^[3] However Unicode considers the difference to be only a matter of font design, and does not have a separate code for the two-stroked version.^[4]

History

The modern real (plural reais) was introduced on 1 July 1994, during the presidency of Itamar Franco, when Rubens Ricupero was the Minister of Finance, as part of a broader plan to stabilize the Brazilian economy, known as the Plano Real. The new currency replaced the short-lived cruzeiro real (CR$). The reform included the demonetisation of the cruzeiro real and required a massive banknote replacement.

At its introduction, the real was defined to be equal to 1 unidade real de valor (URV, "real value unit") a non-circulating currency unit. At the same time the URV was defined to be worth 2750 cruzeiros reais, which was the average exchange rate of the U.S. dollar to the cruzeiro real on that day. As a consequence, the real was worth exactly one U.S. dollar as it was introduced. Combined with all previous currency changes in the country's history, this reform made the new real equal to 2.75 x 10¹⁸ (2.75 quintillions) of Brazil's original "réis".

Soon after its introduction, the real unexpectedly gained value against the U.S. dollar, due to large capital inflows in late 1994 and 1995. During that period it attained its maximum dollar value ever, about US$1.20. Between 1996 and 1998 the exchange rate was tightly controlled by the Central Bank, so that the real depreciated slowly and smoothly in relation to the dollar, dropping from near 1:1 to about 1.2:1 by the end of 1998. In January 1999 the deterioration of the international markets, disrupted by the Russian default, forced the Central Bank, under its new president Arminio Fraga, to float the exchange rate. This decision produced a major devaluation, to a rate of almost R$2 : US$1.^[5]

In the following years, the currency's value against the dollar followed an erratic but mostly downwards path from 1999 until late 2002, when the prospect of the election of leftist candidate Luiz Inácio Lula da Silva, considered a radical populist by sectors of the financial markets, prompted another currency crisis and a spike in inflation. Many Brazilians feared another default on government debts or a resumption of heterodox economic policies, and rushed to exchange their reais into tangible assets or foreign currencies. In October 2002 the exchange rate reached its historic low of almost R$4 per US$1.

The crisis subsided once Lula took office, after he, his finance minister Antonio Palocci, and Arminio Fraga reaffirmed their intention to continue the orthodox macroeconomic policies of his predecessor (including inflation-targeting, primary fiscal surplus and floating exchange rate, as well as continued payments of the public debt). The value of the real in dollars continued to fluctuate but generally upwards, so that by 2005 the exchange was a little over R$2 : US$1. In May 2007, for the first time since 1999, the real became worth more than US$0.50 — even though the Central Bank, concerned about its effect on the Brazilian economy, had tried to keep it below that symbolic threshold.

Historical exchange rate (USD:BRL)

Users

Brazil, and sometimes used in bordering countries, especially Brazil/Uruguay and Brazil/Paraguay borders in which every year millions of Brazilians go shopping at the duty-free stores etc. It is also widely accepted in Argentina, not only in shops and duty-free stores in border towns like Puerto Iguazú but also in shops and restaurants in the capital city, Buenos Aires.

Coins

First series (1994–1997)

Along with the first series of currency, coins were introduced in denominations of 1, 5, 10 and 50 centavos and 1 real; the 25 centavos piece soon followed. All were struck in stainless steel. The original 1-real coins dated 1994-1997 have been withdrawn from circulation since 31 December 1997; all other coins remain legal tender.

Second series (1998–present)

1 real coin

In 1998, a second series of coins was introduced. It featured copper-plated steel coins of 1 and 5 centavos, brass-plated steel coins of 10 and 25 centavos, a cupronickel 50 centavos coin, and a bi-coloured brass and cupronickel coin of 1 real. However, from 2002 onwards, steel was used for the 50 centavos coin and the central part of the 1 real coin.

In November 2005, the Central Bank discontinued the production of 1 centavo coins, but the existing ones continue to be legal tender. Retailers now generally round their prices to the next 5 or 10 centavos.

Commemorative coins

The Brazilian Central Bank has also issued special commemorative versions of the 1 real coin on special occasions. These coins are legal tender and differ from the standard ones only on the reverse side.

Banknotes

Original series

10 reais banknote from the old series

In 1994, banknotes were introduced in denominations of 1, 5, 10, 50 and 100 reais. These were followed by 2 reais in 2000 and 20 reais in 2001. On 31 December 2005, BCB discontinued the production of the 1 real banknote, but it remains legal tender.

Polymer 10 real note

The polymer banknote, with Cabral's images.

In April 2000, in commemoration of the 500th anniversary of the Portuguese arrival on Brazilian shores, the Brazilian Central Bank released a polymer 10 real banknote that circulates along with the other banknotes above. The Brazilian Mint printed 250 million of these notes, which at the time accounted for about half of the 10 real banknotes in circulation.

This note contains a more complex design, as follows:

Obverse:

• Image of Pedro Álvares Cabral, the Portuguese sea captain;
• A representation of the map "Terra Brasilis", one of the earliest drawings of the land;
• A passage from Pero Vaz de Caminha's letter to King Manuel I of Portugal, the first known description of Brazil;
• A 16th-century Portuguese Rose of Winds;
• To the right of the map, five ships from Cabral's expedition appear;
• In the background, decorative elements from Portuguese tiles can be seen;
• The white area around the red dot is actually transparent (the red dot is translucent);
• Finally, also in the background, the Cross from the Order of Christ, which was present in all Portuguese ships of the time, appears.

Reverse:

A stylized map of Brazil with photographs depicting the ethnic variety of the Brazilian people (white, black, and amerindian).

New series

100 reais banknote from the new series

On 3 February 2010, the Central Bank of Brazil announced a new series of the real banknotes which would begin to be released in April 2010. The new design added security enhancements in an attempt to reduce counterfeiting. The notes have different sizes according to their values to help vision-impaired people. The changes were made reflecting the growth of the Brazilian economy and the need for a stronger and safer currency. The new banknotes began to enter circulation in December 2010, coexisting with the older ones.^[7][8]

"God Be Praised" controversy

Since 1986, Brazilian bank notes contain the words “Deus Seja Louvado” (God Be Praised). In 2012, a federal prosecutor from São Paulo sought a court order to force the central bank to replace the nation's entire supply of paper currency with bills that do not display these words, arguing that Brazil is a secular state and that this phrase violates the rights of non-Christians and nonbelievers. The Bank responded by stating that the preamble to the Brazilian constitution explicitly states that the democracy was formed “under the protection of God”, and that the state, “not being atheist, anticlerical or antireligious, can legitimately make a reference to the existence of a higher being, a divinity, as long as, in doing so, it does not make an allusion to a specific religious doctrine.”^[9]

Current Real exchange rates

See also

• Portuguese real
• Plano Real
• Economy of Brazil

References

External links

Wikimedia Commons has media related to Real.

• Brazil's Currency War
• Images of historic and modern Brazilian bank notes
• The Invention of the Real (This American Life)
• Historical banknotes of Brazil

Historical currencies of Brazil Real Rs [-]  – 1942 Cruzeiro Cr$ / ₢ [-] 1942 – 1967 Cruzeiro novo NCr$ [-] 1967 – 1970 Cruzeiro Cr$ [BRB] 1970 – 1986 Cruzado Cz$ [BRC] 1986 – 1989 Cruzado novo NCz$ [BRN] 1989 – 1990 Cruzeiro Cr$ [BRE] 1990 – 1993 Cruzeiro real CR$ [BRR] 1993 – 1994 Real R$ [BRL] 1994 – present