In the 80's Brazil was plagued a galloping inflation, as in 50% a month. The currency changed names frequently, and trying to understand it was a bad joke. Brazilians finally started to enjoy some economic stability in the 90's, with the creation of the real (hey-ALL), plural reais (hey-ICE).
There are R$100, R$50, R$20, R$10, R$5, R$2 and R$1 bills, featuring assorted images of Brazilian fauna. The real is divided into 100 centavos (sayin-TA-vush). Coins are handy for a bus ride, gum, and the inevitable cafezinho. They come in all colors, from silver, gold, copper, silver with a gold band... This is a gimmick the Central Bank used, so people would stop throwing coins away - a habit acquired during the inflation years.
The real was originally quoted US$1, and there was a fluctuation band. In January 99 the government stopped interfering in the exchange rate, and the real underwent a major devaluation. The current exchange rate is around US$1=R$2.50
This devaluation couldn't be better news for travelers visiting Brazil. Eating out and shopping are more affordable than ever. Enjoy top restaurants in all price ranges, and do not miss the boutiques in Ipanema, Copacabana, and the malls. Brazilian goods are of excellent quality, and you will find everything from bikinis to gems, shoes, leathers, etc.
Now that you know you reais, tip smartly! At restaurants in addition to the couvert (i.e. bread basket + spreads) a 10% tip is usually included - unless it's a self-serve joint, obviously. Give a little more only if service was especially friendly. Taxi drivers do not expect big tips, and may even round down the total to locals (?). Round up, or give an extra R$1 if you are feeling especially generous.
Bellboys and chamber maids expect to get at least R$1. Give less and you will be considered a mão-de-vaca (mown-djee-VA-ca) - Portuguese for cow's hand, you know, the kind that never opens... Barbers, hair stylists, masseurs, manicurists, pedicurists and the like expect at least a 10% tip (again never less than R$1). Tips to bartenders at discos are not mandatory (but appreciated).
Going on to other practical aspects, let's consider how to bring your spending money.
Traveler's ChecksYes, it's the safest way, couldn't agree with you more, but... Well, the first drawback is that you will get a worse rate than you would for cash. Many travel agencies with currency exchange desks simply do not take them. To get rid of traveler's checks you may have to go to a Citibank or AmEx American Express branch. Other banks charge a flat rate of US$20 to exchange your checks. You will probably end up trading in more than you had planned, only to avoid paying the fee again. You will be stuck with a stash of Brazilian cash, and there goes your safety factor down the drain. It may be a good idea to bring some checks for an emergency, though.
CashCash is always convenient to bring as spending money. If you are worried about safety, wear one of those money belts inside your pants until you get to your hotel. Any decent property will have a safety box in the bedroom closet, where you can safely store your valuables. Bring at least a few hundred bucks to pay for expenses like transportation, snacks, and entertainment.
Credit Cards & Debit CardsPlastic is very popular in Rio, and it will avoid the hassle of carrying too much cash around. Visa, AmEx, MasterCard and Diner's are the most widely accepted, probably in this order. Cards are great to pay your hotel bill, most restaurants, that shopping spree that happened on a cloudy day... If your bank or credit card uses the Cirrus system, you may also withdraw cash at many ATM's.
Exotic CurrenciesWe do not mean to offensive, but anything other than US$ (American dollars) or Euros could be considered exotic in Rio. The simple reason is the law of supply and demand. There is a strong demand for US$, so this is the currency that gets the best rates, period. You may bring pounds, yens, pesos, Australian or Canadian dollars, but get ready for an unfair exchange rate. And you may have to walk around a little before you find someone willing to take your exotic cash (again, no offense). If it's any consolation, Brazilians also have to take US$ or Euros when they travel abroad, or they would go through the same ordeal.
Personal ChecksSorry, but personal checks in your local currency are as good as a US$3 bill around here. Wealthy locals with accounts abroad have connections to travel agencies that will cash their personal checks, just because they are good customers or something (and charge a substantial fee, of course). But if you are someone off-the-street... fat chance. Leave your check book at home.
Where to, Where Not to...Whenever you exchange money, you lose money. It's a simple law of nature we have learn to live with. If they paid you, say, R$2.80 when you sold them your dollar, it will cost you R$3.10 to buy it back. This difference is called spread, and this is how these guys earn a living. In other words, do not cash more than you need. Having said that, let's see the best places for you to exchange your currency.
ATM's with Cirrus system are your best bet. They use the same exchange rate that your credit card company will use back home, when your expenses in Brazil are due. Travel agencies with currency exchange desks offer attractive rates, followed closely by major banks like Banco do Brasil or Citibank. Luxury hotels have an exchange desk, most times offering offensively low rates. On weekends or after banking hours they are your only choice, though. Do not exchange cash with strangers in the street (hellooo!).