nonconformiststraightguy
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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 Finance, as part of a broader plan to stabilize the Brazilian economy, known as Plano Real, replacing the short-lived cruzeiro real.
On 1 July 1994, the real became legal tender, with R$ 1.00 = 1 URV a non-monetary currency. 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.
As a result of multiple currency reforms, the present real is equivalent to 2.75 x 1018 pre-1942 reais.
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 fluctuated wildly. Following this period (1994-1999) of a quasi-fixed exchange rate, an inflation-targeting policy was instituted 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 Inácio Lula da Silva, considered a radical populist by sectors of the financial markets, 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$1. However, following assurances by then central bank president Arminio Fraga and repeated assertions by Lula and his finance minister that orthodox macroeconomic policies would be continued (including inflation-targeting, primary fiscal surplus and floating exchange rate, as well as continued payments of the public debt) the real has been getting stronger and stronger against the dollar and, since the beginning of 2005, most other world currencies as well.
In Brazil, the symbol R$ is used before the number and the decimal separator is a comma (,): R$ 123,45.
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.
So, I think you reals , cannot be legal tender, if they were issued before July , 1994 |
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