All About the Brazilian Real
The real (pronounced hey-al, with plural reais pronounced hey-ice) is the official form of currency of Brazil and is represented with the symbol R$. Its ISO code is BRL. The real is divided into 100 centavos. Here is a brief history of the real and a description of its banknotes and coins.
A Brief History
The real was introduced as a form of currency in Brazil very recently—on July 1, 1994, to be exact. It emerged as part of the Plano Real (“Real Plan”), a plan laid out by then-President Itamar Franco and Minister of Finance Rubens Ricupero in an effort to stabilize the Brazilian economy. This modern real replaced the short-lived cruzeiro real, which in turn had replaced a third form of cruzeiro currency, which was created following severe economic crisis. With the modern real came a demonetization of the cruzeiro real and an extensive overhaul of the country’s banknotes.
When the real was introduced, it was defined as equaling 1 unidade real de valor (URV, “real value unit”), a non-circulating currency unit. Meanwhile, 1 URV was set equal to 2750 cruzeiros reais, which was the average exchange rate of the cruzeiro real to the US dollar on that day. This meant that 1 Brazilian real was set to equal 1 US dollar on the day that it was introduced.
Soon after its introduction, the real unexpectedly gained value against the US dollar, and in late 1994 and 1995, the real saw its highest ever exchange rate of R$1.00 being equal to US$1.20. By the end of 1998, however, this exchange rate had essentially reversed, with R$1.20 being equal to US$1.00. Then in January of 1999, the deterioration of the international markets forced the Central Bank of Brazil to float the exchange rate, which led to rapid devaluation for the real, with R$2.00 equaling US$1.00. The years following saw an up-and-down fluctuation, and in May of 2007 the real finally rose above the 2:1 USD exchange rate. Since then, there has been a steady decline in the real’s value, and as of March of 2015, R$3.10 was equal to US$1.00.
The first real banknotes introduced in 1994 came in denominations of 1, 5, 10, 50 and 100 reais. A 2 reais banknote was added in 2000, and in 2001 a 20 reais banknote was added. In 2005, the 1 real banknote ceased to be produced, but it remains a form of legal tender. The obverses of these banknotes all feature the Republic’s Effigy, portrayed as a bust, while the reverses feature images of native wildlife.
Real coins come in denominations of 1, 5, 10, 25, and 50 centavos and 1 real. The coins were originally struck in stainless steel, but now they are struck in a variety of metals such as copper, brass, and cupronickel. Since 2005, 1 cent coins have not been produced, but they remain a form of legal tender. Real coins feature the southern cross on the obverses, while the reverses feature prominent historical figures in Brazil’s history.