Brazilian real
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The real (symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942.) Image:Real.jpg
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History
From the Colonial period to 1942
The real (plural réis) was the currency used by the first Portuguese settlers to arrive in the then New World, but the first official money to circulate bearing the name "real" was actually printed in 1654 by the Dutch, during their occupation of part of the Brazilian Northeast. The colonial real was not sub-divided in smaller units.
The real became Brazil's official currency in 1690, and it would remain as such until 1942, when it was replaced by the cruzeiro at a rate of 1000 réis = 1 cruzeiro.
The real was affected by inflation during its long lifespan and the base currency unit shifted from one real to mil réis (one thousand réis) and to one conto de réis (one million réis) in the final years of the República Velha era. One conto de réis was represented by the symbol Rs written before the value and by a dollar sign. 350 réis was written as "Rs 350". 1,712 réis, "Rs 1$712" and 1,020,800 réis was written as "Rs 1:020$800"; This means that the colon functioned as the millions comma and the $ sign as the thousands comma.
1994 to the Present
The real (plural reais) was implemented on 1 July 1994, during the presidency of Itamar Franco, when Fernando Henrique Cardoso was the Minister of Finances, as part of a broader plan to stabilize the Brazilian economy, known as Plano Real, substituting the short-lived cruzeiro real.
According to economic academics, one of the causes of inflation in Brazil was the inertial inflation phenomenon. Prices were readjusted on a daily basis according to changes in price indexes and to the exchange rate of the local currency to the US dollar. The Ministry then created a non-monetary currency, the Unidade Real de Valor ("URV") which value was set to equal 1 US dollar. All prices were quoted in these two currencies, cruzeiro real and URV, but payments had to be made exclusively in cruzeiros reais. Prices quoted in URV did not change over time, while their equivalent in cruzeiros reais increased nominally every day.
On 1 July 1994, the real became legal tender, with R$ 1.00 = 1 URV. At that day, the CR$ to URV exchange rate was set at CR$ 2,750.00/URV (the exchange rate of the US dollar to the cruzeiro real at that day), and a massive banknote changeover process was undertaken, due to the demonetization of the cruzeiro real.
The real initially appreciated (gained value) against the U.S. dollar as a result of the large amount of capital inflows in late 1994 and 1995. It then began a gradual depreciation process, culminating in the 1999 January Brazilian currency crisis, when the Real suffered a maxi-devaluation, and fluctuaded wildly. Following this period (1994-1999) of a quasi-fixed exchange rate, an inflation-targetting policy was institued by new central bank president Arminio Fraga, which effectively meant that the fixed-exchange period was over. However, the currency was never truly "free," being more accurately described as a managed or "dirty" float, with frequent central bank interventions to manipulate its dollar price.
The currency suffered a gradual depreciation until late 2002, when the prospect of the election of PT's (Labour Party) candidate Luiz Inacio Lula da Silva, considered a radical populist by sectors of the population, prompted another currency crisis and a spike in inflation, as many Brazilians fearing another default or a resumption of heterodox economic policies purchased tangible assets as an inflation hedge or just simply took their money out of the country. At its worst point in October of 2002, the Real actually reached its historic low of almost R$4 per US$1. However, following assurances by then central bank president Arminio Fraga and repeated assertions by Lula and his finance minister that orthodox macroeconomic policies would be continued (including inflation-targeting, primary fiscal surplus and floating exchange rate, as well as continued payments of the public debt) the real has been getting stronger and stronger against the dollar and, since the beginning of 2005, most other world currencies as well (including the euro and yen).
Banknotes
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In January of 2006, the Brazilian Central Bank discontinued the manufacturing of the one real banknote. The existing units continue to be valid, but without constant renewal, the intention is to extinguish this denomination for a banknote — it is expected to happen over time, as the existing banknotes deteriorate and are eventually removed from circulation. The objective is to keep only the one real coin in this denomination. The one real banknote is the first and thus far only banknote released when the Real was reintroduced as the official currency of Brazil to be discontinued (which took place approximately twelve years after its creation).
Polymer banknote
In April 2000, in celebration of the 500th anniversary of the Portuguese arrival on Brazilian shores, the Brazilian Central Bank released a polymer 10 reais banknote that circulates along with the other banknotes above.
The Brazilian Mint printed 250 million units, which at the time accounted for about half of the 10 reais banknotes in circulation.
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Illustrations
The polymer banknote contains a more complex design, as follows:
Front:
- Image of Pedro Álvares Cabral, 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 also transparent, but due to the color, less so);
- Finally, also in the background, the Cross from the Order of Christ, which was present in all Portuguese ships of the time, appears.
Back: A styled version of a map of Brazil with photographs depicting the ethnic variety of the Brazilian people (white, black, indian and mestizo).
Coins
There are two types of coins for each denomination. The first type, released in 1994, was made of stainless steel. Those coins are called First Family. Later, the government decided to release a second set of coins, with different colors and sizes, to facilitate the use by the general public and hinder counterfeiting. Those are the Second Family, released in 1998.
Both families are equally valid, but the government has plans to eventually remove the First Family from circulation and keep only the second set of coins. On December 23 2003, the First Family's one real coin started to be withdrawn from circulation, being replaced by the Second Family's one as they arrive at a bank. In November of 2005, the Brazilian Central Bank decided to discontinue the manufacturing of new units of the one cent coin, from both families. The existing units, from both the First and the Second Families, continue to be fully valid, but without renewal, this denomination is expected to disappear from circulation gradually. The explanation given was that the Brazilian people is prone to overlook a denomination as low as one cent, causing the coins to be underused and thus making them expendable.
First family
Images on board are to scale
Second family
Images on board are to scale <tr><td>
| Value | Front | Reverse | Engravings |
|---|---|---|---|
| 0,01 | Image:1centavoII.jpg | Image:1centavoIIback.jpg | Front: The Southern Cross in right upper side. Back: Depicts Pedro Álvares Cabral, Portuguese sea captain. 1500s Portuguese ship in the background. |
| 0,05 | Image:5centavoII.jpg | Image:5centavoIIback.jpg | Front: The Southern Cross in right upper side. Back: Depicts Joaquim José da Silva Xavier (also known as Tiradentes), martyr of early independence movement. In the background, a triangle, symbol of the movement, and a dove, symbol of peace and freedom. |
| 0,10 | Image:10centavoII.jpg | Image:10centavoIIback.jpg | Front: The Southern Cross in right upper side. Back: Depicts Emperor Pedro I, Brazil's first monarch. In the background, the Emperor on a horse: scene allusive to the proclamation of independence. |
| 0,25 | Image:25centavoII.jpg | Image:25centavoIIback.jpg | Front: The Southern Cross in right upper side. Back: Depicts Field Marshal Manuel Deodoro da Fonseca, Brazil's first Republican president. The Republic's coat of arms is in the background. |
| 0,50 | Image:50centavoII 2.jpg | Image:50centavoIIback 2.jpg | Front: The Southern Cross in right upper side. Back: Depicts José Maria da Silva Paranhos Júnior (also known as Baron of Rio Branco), the country's most distinguished Minister of Foreign Affairs. In the background, image of the country with ripples expanding outwards, representing the expansion of Brazil's foreign policy and the solidification of the national borders. |
| 1 | Image:1realII 2.jpg | Image:1reallIIback 2.jpg | Front: The Southern Cross in right upper side. Back: Outer ring depicts sample of marajoara art pattern. In the inner ring, the effigy, symbol of the Republic. |
Commemorative versions of the one real coin
On occasions deemed special, the Brazilian Central Bank has released special versions of the one real coin. So far, three different versions have been released, in commemoration of three occasions. The difference between those coins and the "main" one real coins is only the reverse, which depicts something allusive to the occasion at hand. All the versions are legal tender, being equally valid with the main issue.
<tr><td>
| Value | Image | Details |
|---|---|---|
| 1 | Image:OneRealSpecial I.jpg | Release date: December 10, 1998 Occasion: The 50th anniversary of the Universal Declaration of Human Rights Units produced: 600 thousand Reverse: The official logo of the commemorations; in bas-relief, a human figure. In the outer ring, the inscriptions "Universal Declaration of Human Rights" and "50th anniversary" |
| 1 | Image:OneRealSpecial II.jpg | Release date: September 12, 2002 Occasion: The 100th birth anniversary of Brazilian ex-president Juscelino Kubitschek Units produced: 50 million Reverse: A profile of Kubitschek's face. Vertically, the inscription "Juscelino Kubitschek's Centenary". In the outer ring, images allusive to the columns of the Alvorada Palace, the Presidential residence in Brasília, the city that he built. |
| 1 | Image:OneRealSpecial III.jpg | Release date: September 23, 2005 Occasion: The 40th anniversary of the foundation of the Brazilian Central Bank Units produced: 40 million Reverse: Image of the trademark Central Bank building, inspired in the official logo developed for the commemorations. In the outer ring, the inscriptions "Brazilian Central Bank" and "1965 40 YEARS 2005" |
Sources
- [1] A brief history of the colonial real until the end of the República Velha era. In Portuguese.
See also
Current BRL exchange rates
AUD | CAD | EUR | GBP | INR | NZD | USD
External links
- Official website of the Brazilian Central Bank (English version)
- Official website of the Brazilian Central Bank (Portuguese version): More complete.
- Official website of the Brazilian Mint (in Portuguese).
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