The Plano Real was based on an analysis of the root causes of hyperinflation in the New Republic of Brazil, that concluded that there was both an issue of fiscal policy and severe, widespread inertial inflation.
The Plano Real intended to stabilize the domestic currency in nominal terms after a string of failed plans to control inflation.
The Plano Real intended to stabilize the domestic currency in nominal terms after a string of failed plans to control inflation.
In addition, high interest rates attracted enough foreign capital to finance the current account deficit and increased the country's international reserves.
It then began a gradual depreciation process, culminating in the 1999 January currency crisis, when the real suffered a maxi-devaluation, and fluctuated wildly.