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BRL - Brazilian Real



The history of the Brazilian real dates back to the early 16th century, the time when the new world was discovered courtesy Christopher Columbus and the Europeans started coming and settling on this new land. The concept of real as a currency was a Portuguese concept and later on picked up by the Dutch settlers who made the currency official in 1654. An interesting fact about the currency is at that time real did not have any subdivisions. It was made the official currency of Brazil in 1690 and since then it served as the legal tender in the country till 1942. All this while when Brazil faced huge changes initially being a colony to the various European countries, then as an imperial state and finally when it converted into a republic in 1889, the Brazilian real also underwent many changes.

The major change that affected the currency adversely during its long life span was inflation and due to extreme levels of inflation in real, even its base unit got shifted from 1 real to 1000 réis at once and also to 1 million réis at one time. Finally in 1942, the currency was replaced by "cruzeiro" @ 1000 réis = 1 cruzeiro. Cruzeiro served as the official currency of Brazil till 1994 when it was replaced by real again. This time the currency was indirectly pegged to the United States dollar with a value close to it. Initially the currency performed well and it even attained a higher value than the dollar at one time. But the appreciation turned out to be a short-lived process and in 1995 a gradual depreciation commenced. In 1999, when the country faced a huge financial crises, the currency suffered the maximum devaluation and reached its lowest value i.e. R$ 4 = US$ 1 and as a result the peg to the US dollar was removed. In the current scenario, the currency has improved a bit and has showed signs of recovery.

The Brazilian real is the legal tender in Brazil that has centavo as its subunit being 100 centavos = 1 real. Central bank of Brazil acts and serves as the reserve bank in Brazil and has sole control over the production and distribution of the currency in the country. The central bank get the Brazilian real notes printed and the coins minted from Casa da Moeda do Brasil, the official mint in the country. The banknotes are printed in 7 denominations that are 1 real, 2, 5, 10, 20, 50 and 100 reais. The obverse sides of all the notes depict the effigy of the republic but the reverse sides of notes have different images of animals and birds. The R$1 note show an image of a hummingbird, R$2 note has a hawksbill turtle, R$5 note possess an image of the great egret, R$10 note has a green wing macaw, R$20 show a golden lion on its reverse side, R$50 show an image of jaguar and the R$100 note depicts a dusky grouper image.

The central bank of Brazil has stopped the production of the R$1 banknote but it is still in circulation rarely used in the day-to-day transactions. More recently, a more complex, polymer version of the R$10 note has also been printed and circulated. The smaller values in the currency are issued as coinage. The currency coinage is divided into two categories - the first family that was minted using stainless steel in 1994 and the second family that was issued in 1998 having different colors for different denominations to facilitate the use by the mass and to restrict counterfeiting. The Brazilian government has plans to withdraw the second family coins gradually from the circulation but currently both the set of coins are legal tender in the country. The coinage is issued in 6 denominations each of both the sets of coins namely 1 centavo, 5, 10, 25, 50 centavos and 1 real. The front sides of all the coins of the all the denominations in the 2nd family depict the Southern Cross and the value of the coin and the reverse sides possess the engraved images of the important people from the history of Brazil. Three commemorative coins were also issued in the years 1998, 2002 and 2005 respectively.

Currency Profile

Real had been an important currency in the South American continent for a very long time. The currency was first used by the Portuguese explorers who first settled in the new world and also by the Dutch in around mid 17th century when they occupied some part of Brazil.

Currently, real is the official currency of Brazil and that is why it is called the Brazilian real. The currency is denoted with the symbol "R$" and was adopted as country’s official currency in as early as 1690 till 1942 and was re-implemented on July 1, 1994. The Brazilian real has BRL as its currency code and 986 as its numeric code according to the ISO 4217 regulation. Real in plural terms is called "reais" and it replaced the interim currency "cruzeiro". The currency is divided into 100 equal subunits named "centavo" i.e. "centavos" in plural terms.

The Brazilian currency has helped the country’s financial position go strong and also helped to strengthen the economy. Real had been the official currency of the country since the 17th century and the decision taken for the re-implementation of the currency in 1994 got so popular that it made the minister of finance at that time, Fernando Cardoso, the president of the country. Brazil has a free-market economy. The GDP growth is 5% and is Brazil is rated as fast-growing economy. Predictions are that Brazil’s economy will be the 5th largest in the world. Unemployment is estimated at 6%. The main industries are coal, airplanes, consumer products, textiles, ore, iron, steel, cement, fertilisers, toys, electronics, and armaments. Export products are footwear, coffee, paper, steel, machinery, transport equipment, automotive parts, and machinery. Import products are chemical products, electronics, machinery, oil, and transport equipment.

Brazil has been blessed with an over abundant oil supply that makes it in possession of the second largest oil reserves in the south American continent. But it still is not self sufficient in terms oil and the country has to import it from other countries arising need to have a strong currency. This need is well supported by the Brazilian real.

The major influencing factor in the replacement of Brazilian real with cruzeiro in 1942 was inflation. Since the currency has been re-implemented, the inflation rate has been maintained at normal levels as a precautionary measures so that the currency stay stable and strong. Some other policies also tend to control the inflation rate and keep the interest of the people in real as a currency. The citizens of the currency have not been given the authorization to maintain bank accounts in foreign currency and also the traveler’s cheques are restricted. But all the major cities in the country have currency exchanges of their own. Free imports and exports of all the currencies have been maintained and if the amount exceeds 10000 reais, it has to be declared.

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