Saturday, May 25, 2013

My two cents worth - or one - or none - São Paulo

Today I went to the pharmacy where my bill came to R$4.09.  That is 4 reais and 9 centavos. The Brazilian currency is the 'real" (pronounced "Hay-ALL") and the "little money" is called centavos. There is no "real" bill, only a coin, much like the English pound coin (see photo below). But what seems to have disappeared is the one centavo coin. I haven't had one in my wallet for months, and possibly years.

Where did it go? At the current exchange rate, one centavo is worth about half of one American cent. It's essentially worthless. Which is what explains the fact that you never see it (unless the government plain old took it out of circulation, which is possible). When your bill comes to R$4.09 like mine above (or as Brazilians write it with a comma:  4,09), don't bother looking for the bowl with the "need a penny, take a penny. Have a penny, leave a penny" sign like in the US. You just round up or round down. I gave the cashier $4 reais and ten centavos, and she did not offer change. I didn't ask for it.  If the bill had come to $4,06, I would have given her $4,05 (four reais and a five centavo coin) and she would not have asked for the missing centavo.

So I got curious this morning about whether or not the Central Bank here still even makes pennies. It does. There are almost 3.9 billion of them in circulation. Each centavo coin costs 16 centavos to make. Why are they still around? This article (Canada starts to eliminate one-cent coins)seems to claim that because a great part of the population works only in cash, a centavo makes a difference in daily payments.

Australia, Denmark, France and Great Britain have done away with their respective one cent coins. Canada is currently studying it. In the US, the cent coin costs 2 cents to make though Illinois, Land of Lincoln, is attached to the penny. Not sure if this is still true, but until a few years ago, you could use pennies in Illinois tolls to pay your 80 cent toll. 80 1-cent coins. Took a while to get that counted in the bin. But it can't be long until the American penny also meets its end.  Makes life simpler.

Brazilian coins

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