Brazil Currency Devaluation

Introduction - History

The Spanish navigator Vicente Yáñez Pinzón was the first known European in the region now constituting Brazil. Landing near the site of present-day Recife on January 26, 1500, he subsequently drifted northward as far as the mouth of the Orinoco River. In April 1500, the Portuguese navigator Pedro Álvares Cabral also reached the coast of present-day Brazil and formally claimed the surrounding region in the name of Portugal. The territory was named Terra da Vera Cruz (Brazil Historical Setting). About a year later in 1501, an expedition under the command of the Italian navigator Amerigo Vespucci was sent to Terra da Vera Cruz by the Portuguese government. In the course of his explorations Vespucci named many capes and bays, including a bay, which he called Rio de Janeiro. He returned to Portugal with a cargo of brazilwood, and from that time forward Terra da Vera Cruz bore the name of the valuable wood Brazil (Brazil Historical Setting).

In 1530 the Portuguese king John III initiated a program of systematic Brazilian colonization. As a first step the king divided Brazil into 15 districts and granted each of the districts, in eternity, to a person prominent at the Portuguese court. The grantees, known as “donatarios”, were vested with extraordinary powers over their domains. Because of the dangers implied in the French depredations along the Brazilian coast, King John revoked most of the powers held by the donatarios and placed Brazil under the rule of a governor-general. The first governor-general, Thomé de Souza, arrived in Brazil in 1549, organized a central government, with the newly founded city of Salvador, or Bahia, as his capital, instituted across-the-board administrative and judicial reforms, and established a coastal defense system (Brazil Historical Setting). Large numbers of slaves were brought into the region from Africa to overcome the shortage of laborers. São Paulo, in the south, was founded in 1554. In 1555 the French founded a colony on the shores of Rio de Janeiro Bay. The Portuguese destroyed the French colony in 1560, and in 1567 they established on its site the city of Rio de Janeiro.

Natural Resources

Brazil is the largest country in South America. Approximately 2.3 million square kilometers, 27 percent of Brazil’s total area of 8.5 million square kilometers can be considered forest. Brazil's forests comprise 17 p...

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