Since it was established as an independent nation in , Brazil has had at least seven different currencies and 12 different currency regimens. The currency is regulated by the Brazilian Central Bank. The original currency name was given by the Portuguese crown when Brazil was founded as a Portuguese colony in The real in its current form has a special symbolic status as its launch came only a few years after Brazil re-established a democratic form government following a two-decade military regime in the s and 70s.
This coincided with efforts to maintain currency stability amid an extended period of hyperinflation. Following the end of the military government in , the country underwent a period of political renewal and economic uncertainty as it struggled to pay off international obligations accrued over previous decades. The efforts to stabilise the economy included opening it to greater foreign trade and investment.
Collor was impeached in following dissatisfaction with the savings confiscation, ongoing economic instability and an alleged electoral scandal. The initiative to launch a new currency was formulated in during the government of his successor, president Itamar Franco.
It was meant to aid the transition from the discredited and highly depreciated cruzeiro-real to the the new currency, the real. The real was introduced on July 1, The real was defined as equal to one URV.
While prices of goods and services continued to be marked up daily, consumers and businesses were encouraged to compare them to prices referenced in URVs, which held relatively stable. That mechanism gave the population a way to determine a reasonable value to pay for their purchases amid a still unstable price environment.
Shortly after its introduction, the real strengthened to as high as BRL0. Following the launch of the real, the currency faced successive tests with the onset of the Mexican currency crisis in and the Asian and Russian crises in and Cardoso and his aides realised that the currency would need strong economic underpinnings if it were to preserve its credibility and remain stable. To shore up confidence in the economy, the government sought to reduce price indexation and introduce administrative reforms and fiscal responsibility legislation.
The real was introduced and initially maintained at parity with the U. To achieve this, the central bank was required to intervene in the currency market selling dollars from its foreign currency reserves.
But with the evolution of the emerging markets crisis late in the decade and insufficient currency inflows to maintain dollar reserve levels, the real came under speculative attack in currency markets.
Monetary policy in Brazil is determined by the Brazilian Central Bank. Brazil is the seventh largest global economy ranked according to its gross domestic product. The country has a diversified economy and is a major producer of commodities and industrialised products. Key manufactured goods produced in the country include automobiles and parts, machinery and equipment, textiles, cement, computers, aircraft, steel, petrochemicals and consumer durable goods.
Among important commodities the country produces include iron ore, soybeans, bauxite, oil, corn, sugar, cotton, cocoa, livestock and forest products. Foreign exchange and financial trading in Brazil are regulated by the central bank and by the Brazilian Securities and Exchange Commission, known as the CVM.
It can also be traded in synthetic currency pairs elsewhere. Since its introduction, the real has been issued as coins, paper money and plastic polymer money. Some of the popular nicknames for Brazilian banknotes include paus, contos, merreis and pila.
Of more common use are coins of 5, 10, 25 and 50 centavos, and of 1 real. Additionally, Brazil has signed agreements with trade partners like Argentina and Uruguay for direct exchanges of currency between the countries to reduce commerce in dollars and avoid the foreign exchange costs of doing so. In the nearly two decades since it was allowed to float against the dollar, the real has varied from highs of around BRL1.
In addition to local policy factors, the currency has shown itself particularly sensitive to alterations in U.
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