Sinking Currency

When Brazil broke loose from Portugal, its currency was called the real (ray-ahl). After a decade of independence, the government had to proclaim a new unit of currency, awkwardly named the milreis (mill-rayss), meaning a thousand reals. Now, after many more rounds of inflation, the basic currency unit is the cruzeiro (crew-zay-roo), and inflation is shriveling it too. Its present exchange value is a small fraction of a cent. The 1,000-cruzeiro bill, long Brazil's biggest bank note, is worth only a little more than $1.

Recognizing the need for a bigger note, the government has just issued the first batch of 5,000-cruzejro bills -- a relief to U.S. visitors, who find their pockets stuffed with string-tied wads of 500-and 1,000-cruzeiro bills. One effect of the new bills was to send the sinking cruzeiro into another downspin, from 850 per dollar to more than 900. " The new 5,000-cruzeiro notes," said a harried Rio exchange-currency broker last week, "are already obsolete." He is so right. Before the Brazilian Congress is a new proposal to authorize 10,000-cruzeiro bills.

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