Brazilian real

The Brazilian real (pl. reais; sign: R$; code: BRL) is the official currency of Brazil. It is subdivided into 100 centavos. The Central Bank of Brazil is the central bank and the issuing authority. The real replaced the cruzeiro real in 1994.

As of April 2019,^[update] the real was the twentieth most traded currency.

Currencies in use before the current real include:

The current real was introduced in 1994 at 1 real = 2,750 cruzeiros reais.

The modern real (Portuguese plural reais or English plural reals) 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 2,750 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 when it was introduced; as of June 2024, that was equivalent to R$8,08 corrected for inflation. Combined with all previous currency changes in the country's history, this reform made the new real equal to 2.75 × 10¹⁸ (2.75 quintillion) 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=R$1. Between 1996 and 1998 the exchange rate was tightly controlled by the Central Bank of Brazil, so that the real depreciated slowly and smoothly to the dollar, dropping from near US$1=R$1 to about US$1=R$1.2 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 US$1=R$2.

In the following years, the currency's value against the dollar followed an erratic but mostly downward 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.