The Real Stabilization Plan of Brazil

Over the past half a century Brazil finally faced a lot of struggle with the RMB exchange rate and finally changed the currency five times before reaching the stability plan that most people think is the best. The stabilization plan that Brazil has concluded and is carrying out is known as Real Madrid. Each of the five currencies mentioned lasts for up to three years, but Real Madrid has been in use for more than 20 years since the actual plan was formulated. Compared to its predecessor, the actual plan can be easily seen as the most successful strategy the Brazilian government follows.

Brazilian Real (BRL, R $), the Brazilian currency, was launched on July 1, 1994 as a strategy for stabilizing the Brazilian economy. Brazil decided to relate its currency Brazilian Real (BRL, R $) to the US dollar in 1994. As a starting point, Real Madrid appreciated against the US dollar for large capital inflows at the end of 1994 and 1995, but turned to look for depreciation after the Brazilian currency crisis in January 1999 It was. The floating program held after East Asia Finance caused a series of financial adverse effects. However, in January 1999 Brazilian Real finally entered the free float. Depreciation expenses continued until the end of 2002, reaching nearly the lowest $ 4 in history. The US dollar rose rapidly. . At the beginning of 2005, the actual circumstances of the US dollar are getting better and better.

In 1994 (July 1), then Treasury Department Treasury Fernando Enrique Cardodo implemented economic reforms in Brazil. Many projects in the past (from 1964 to 1994) could not respond to inflation, difficult plans - actual plans - the most successful stabilization program in Brazilian history. Prior to the actual planning, the inflation rate is surprisingly high (over 2000%) every year. By reducing the "true" devaluation of the new currency associated with the dollar, the stability rose again. Economic policies of the Brazilian Central Bank (BACEN) as a whole are aimed at managing exchange rates. BACEN must maintain the exchange rate within the first determined range. In addition, depending on the inflation rate, the interval periodically depreciates.

In January 1999, Brazil abruptly changed the policy of the exchange rate and abandoned the anchor of a strong financial anti-inflation measure of the real plan. In the next two months, the Brazilian currency real was depreciated by about 40%, and the economy was lowered to a temporary recession. Despite this economic downturn, the Brazilian government continued to implement its economic development plan and the economy responded by regaining its expansion. As mentioned above, the growth rate has declined to 8% per annum over the past two decades. GDP in 2001 was 5%