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The lowdown on the Brazilian real
The Brazilian real was introduced on 1st July 1994, when it replaced Brazil’s old currency, the cruzeiro real. This was all part of the Plano Real, a reform package designed to put an end to three decades of inflation across the country.
The sign for the Brazilian real is known as the cifrão and it looks very much like a dollar sign ($). Unlike the dollar, it’s officially written with two vertical strokes instead of one, but you probably won’t find it on any computer keyboards because it’s considered a matter of font design rather than its own symbol, and is usually written as R$ instead. Also, it’s worth remembering that the plural of real is reais, not reals.
A look back at British pound to Brazilian real rates
On the day it was introduced in 1994, the Brazilian real was defined as equal to one unidade real de valor (also known as one URV or ‘real value unit’). This URV was in turn defined to be worth 2750 of the old currency, the cruzerios real, which was the exchange rate of the US dollar to the cruzeiro real on that particular day. In other words, when it was introduced, the new real was worth exactly one US dollar, with the dollar worth around £0.65 at the time.
Right after its introduction, the real started to unexpectedly gain value against the US dollar and the British pound, as a result of large capital inflows across late 1994 and into 1995, reaching a value of $1.20 and £1. After this, from 1996 up until 1998, the Central Bank kept a tight control on the exchange rate, ensuring that the real depreciated slowly, remaining at a value of around 0.70 British pounds.
The Brazilian real devaluation
In January of 1999, the Russian default and the disruption of the international markets eventually forced the Central Bank to float Brazil’s exchange rate. This meant that the Brazilian real quickly devalued, falling from a value of 0.50 British pounds to around 0.28.
From 1999 to 2002, the real devalued gently with no real shocks – until late 2002 that is, when the leftist candidate Luiz Inácio Lula da Silva came onto the scene. The financial markets considered Lula to be a radical populist and his presence lead to an increase in inflation and a currency crisis. Brazilians were worried about another default on government debt and started exchanging their reais into other currencies or into physical assets. By October 2002, the exchange rate had reached an extremely low rate of just 0.16 British pounds.
However, once Lula actually took office, the crisis began to subside. Together with finance minister Antonio Palocci and Arminio Fraga, he reassured the nation that their intention was to continue the policies already in place, such as inflation-targeting and carrying on the floating exchange rate. After this, the real began to fluctuate upwards again, rising to £0.25 by 2005.
Steadily increasing in value, the real reached a value of £0.33 by September of 2008.
The Brazilian real over the last ten years
The real has had a somewhat tempestuous last ten years. Falling in value against the pound, factors such as the corruption scandal at state-owned oil company Petrobas, the subsequent downgrade by credit rating agency Moody’s and President Dilma Rousseff's austerity plan have all played a role. Within the last couple of years, the real has fallen all the way to a value of just £0.16 pound (as seen in September 2015). This is great news for your pounds though, meaning you’ll get around 6.40 Brazilian reais for your pound, as opposed to just 2.40 in 2011.
Exchange rates last updated Tuesday, 24 January 2017 08:40:36 GMT.
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