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| real (Brazilian currency) | |
|---|---|
| Name | real |
| Local name | real |
| Local name lang | pt-BR |
| Iso code | BRL |
| Introduced | 1994 |
| Subunit name | centavo |
| Subunit ratio | 1/100 |
| Issuing authority | Central Bank of Brazil |
| Inflation rate | (variable) |
real (Brazilian currency)
The real is the official currency of the Federative Republic of Brazil, introduced in 1994 as part of a stabilization program in response to decades of financial turmoil. It functions as the medium of exchange for transactions across Brazil, from the urban centers of São Paulo and Rio de Janeiro to the Amazonian region around Manaus and Belém. The modern real replaced several previous monetary units and plays a central role in Brazilian fiscal relations with partners such as United States, China, European Union, and regional blocs including Mercosur and Latin America institutions.
The name real traces to the Portuguese term real, historically used in the Kingdom of Portugal and the Portuguese Empire, including colonial Brazil (colonial) prior to independence. The etymology is connected to the Crown of Castile and medieval Iberian monetary systems where the term denoted a unit of account and coinage used alongside other denominations such as the escudo and the doubloon. The revival of the name in 1994 alluded to earlier Brazilian currency names from the imperial and republican periods tied to the Empire of Brazil and the early Republic of the United States of Brazil era.
The adoption of the current currency unit occurred under the Plano Real, a policy package designed by policymakers including Fernando Henrique Cardoso—then Minister of Finance—and implemented during the presidency of Itamar Franco. The plan followed a sequence of prior monetary reforms that introduced units such as the cruzeiro, cruzeiro real, and cruzado across episodes associated with hyperinflation in the late 20th century. The transition to the new currency involved the temporary use of a unit of account called the Unidade Real de Valor (URV) to anchor prices and wages, drawing on concepts similar to those used in stabilization programs in countries like Argentina and programs advised by institutions such as the International Monetary Fund.
During its early years the real underwent phases of appreciation and depreciation influenced by global shocks—including the Asian financial crisis and the Russian financial crisis—and domestic political cycles involving administrations of Fernando Henrique Cardoso, Luiz Inácio Lula da Silva, Dilma Rousseff, and later presidents. Episodes such as the 2008 financial crisis and trade shifts tied to commodity prices affected the currency's external value through linkages to exports such as soy and iron ore from states like Minas Gerais and Mato Grosso.
Coinage for the modern currency includes denominations in centavos and reals, struck by the Casa da Moeda do Brasil. Common coin types feature portraits and national symbols associated with figures and entities like Pedro Álvares Cabral (historical Portuguese navigators are often referenced in Brazilian iconography) and fauna from biomes such as the Amazon rainforest. Banknotes issued by the Central Bank of Brazil have featured successive series with imagery referencing Brazilian fauna and cultural heritage, using security technologies comparable to those adopted by the Bank of England and the United States Federal Reserve. The design and issuance process involves coordination with international security printers and standards organizations in Switzerland and Germany, while circulating commemorative sets mark events tied to institutions like the Olympic Games hosted in Rio de Janeiro and anniversaries of the Constitution of Brazil.
Monetary policy for the currency is conducted by the Central Bank of Brazil, whose framework employs instruments such as the Selic rate to target inflation in an arrangement resembling inflation-targeting regimes found in New Zealand, Canada, and Chile. Exchange rate behavior has been influenced by interventions, capital flows tied to sovereign debt issuances in international markets, and bilateral relations with trading partners such as Argentina, United States, and China. The currency has experienced volatility during episodes including sovereign rating changes by agencies like Moody's, Standard & Poor's, and Fitch Ratings, and during geopolitical events affecting global liquidity such as decisions by the Federal Reserve and shifts in European Central Bank policy.
The currency's stabilization is credited with enabling macroeconomic planning and contributing to reductions in inflation that supported social programs championed by administrations including those of Luiz Inácio Lula da Silva. Critics point to constraints on fiscal policy following stabilization and to exchange rate pass-through effects affecting industries from automotive industry in Brazil to agriculture exporters reliant on global demand from China. Debates involve institutions and actors such as trade unions affiliated with the Central Única dos Trabalhadores, private banks including Itaú Unibanco and Banco do Brasil, and market participants debating the balance between price stability and growth. Policy critiques also reference constitutional budget rules and fiscal frameworks associated with Brazil's legislative processes in the National Congress of Brazil.
Beyond transactions, the currency appears in Brazilian literature and art, from works referencing urban life in São Paulo by authors like Décio Pignatari and cultural depictions in films showcased at festivals such as the Festival de Brasília and Cannes Film Festival. Numismatists collect historical and commemorative pieces produced by the Casa da Moeda, and academic collections in institutions like the Museu Histórico Nacional preserve earlier coinage from the colonial and imperial eras. The currency also features in cultural events tied to soccer clubs like Clube de Regatas do Flamengo and Sport Club Corinthians Paulista, where matchday commerce and sponsorships intersect with national symbols represented on coins and notes.
Category:Currencies of South America Category:Economy of Brazil