50 years of strong Brunei currency in Singapore

The Brunei dollar has had a strong presence in Singapore, going by the value of Brunei notes and coins deposited by banks with the MAS.
The Brunei dollar has had a strong presence in Singapore, going by the value of Brunei notes and coins deposited by banks with the MAS. PHOTO: ST FILE

It has been 50 years since Singapore and Brunei agreed to allow the currencies from both countries to be used for shopping in either place.

Under the Currency Interchangeability Agreement signed with Brunei in June 1967, Brunei dollar notes can be used in Singapore and vice versa, at an at-par exchange rate. This means one Singapore dollar gets one Brunei dollar and vice versa.

Statistics by the Monetary Authority of Singapore (MAS) show that the Brunei dollar has had a strong presence in Singapore, going by the value of Brunei notes and coins deposited by banks with the MAS.

An average of about $1.3 billion Brunei dollars (S$1.3 billion) was repatriated annually for the past three years to its financial regulator Autoriti Monetari Brunei Darussalam, said the MAS last Friday .

"Over the last 50 years, the agreement has been mutually beneficial for both Singapore and Brunei and it has remained intact despite significant economic challenges faced by both countries over the years," it said.

It noted the domestic and international purchasing power of the Singdollar "is anchored by the credibility of the MAS' exchange rate-centred monetary policy in keeping inflation low and stable".

The MAS added that this has been extended to Brunei via the agreement and the Brunei dollar's peg to the Singdollar, and all this has led to stronger trade and investment flows between the two countries.

For instance, trade between Singapore and Brunei has grown from under US$20 million (S$27.5 million) in 1968 to US$822 million last year.

"Despite the rapid growth in each country's total trade with the rest of the world, Singapore has remained one of Brunei's top 10 trading partners," said the MAS.

Also, Singapore's trade in services with Brunei has risen from US$76 million in 2000 to US$400 million in 2015, and has expanded more rapidly than Singapore's trade in services with the world.

Before 1967, Brunei, Singapore and Malaysia had a common currency, as part of a monetary union. When that fell apart, each country issued its own currency.

Malaysia originally had interchangeability agreements with Singapore and Brunei, but those ceased in May 1973 after major currencies of the world decided to float against the United States dollar.

The Singdollar-Brunei dollar agreement is believed to the only such arrangement in Asia.

The MAS said: "The agreement is supported by Singapore and Brunei's underlying economic fundamentals, such as their strong external balance positions, including their foreign reserve holdings... and has been compatible with macroeconomic stability in both Singapore and Brunei."

For instance, it noted through a de facto peg of the Brunei dollar to the Singapore dollar, both countries have been able to share "the benefits of the strong nominal anchorage provided by an exchange rate-centred monetary policy framework".

The MAS said it works with bodies such as the Singapore Tourism Board and National Environment Agency, as well as trade and business associations, to remind stakeholders of the agreement.

Should a retailer here reject the Bruneian dollar, it should be referred to the MAS with details of the purchase.

The MAS said: "We will contact the retailer to educate them on the acceptance of Brunei Darussalam currency in Singapore."

A version of this article appeared in the print edition of The Straits Times on July 03, 2017, with the headline '50 years of strong Brunei currency in S'pore'. Print Edition | Subscribe