Glossary: real (pl., reais; R$)
DEFINITION:
On July 1, 1994, Brazil’s sixth currency in nine years, the dollar-linked real (pronounced hay-OW), equal to 2,750 cruzeiro reais, replaced the cruzeiro real (CR$--q.v.). During the transition from the cruzeiro real to the real, Real Value Units (Unidades Reais de Valor--URVs) acted as a temporary currency, beginning on March 1, 1994, with one URV equal to one real or CR$2,750. URVs began gradually replacing indexes used to adjust wages, prices, taxes, contracts, and interest and utility rates. The URV was also part of an economic stabilization plan, the Real Plan (Plano Real), under which prices were gradually converted from cruzeiro reais to URVs. The URV is, by definition, the inflation rate itself. The URV rate is calculated as the average of a basket (cesta) of price indexes. The fluctuation band mechanism set by the Central Bank (q.v.) in March 1995 provided for bank intervention in the interbank exchange markets whenever the buying floor rate of R$0.88 per dollar and the ceiling selling rate of R$0.93 per dollar were affected by the market rates. The Central Bank restructured the real’s trading ban on January 15, 1997, to a range of 1.0430 to 1.0480 per dollar, after the currency fell through its previous band. The dollar/real rate on April 13, 1998, was R$1.140.