The commemorative notes also symbolise their continued commitment in forging closer ties, said the leaders of both countries.

Prime Minister Lee Hsien Loong and Sultan Hassanal Bolkiah were speaking at a ceremony here to introduce the notes and celebrate the 40th anniversary of the Currency Interchangeability Agreement.

PM Lee described the $20 bills and treaty as 'a significant milestone in our bilateral relations'. They will continue to play an important role in nurturing ties, he said.

'This unique currency arrangement has worked well for both sides, contributing to monetary stability and facilitating bilateral trade and investments as well as tourism,' he added.

It was a view shared by Sultan Bolkiah who spoke about the benefits of the agreement, which came into effect on June 12, 1967.

It made the dollar of each country legal tender in the other and of the same value.

The new $20 notes, said Sultan Bolkiah, symbolise the 'strong combined financial reserves that enable us to resist speculation and the damaging costs that this can have on our economies'.

The notes, which are legal tender in both countries, signal a further push in maintaining peace and stability between both countries.

'Like our friends in Singapore, we see that as being the bedrock upon which successful modern nations are built...it is that which gives our people confidence in the future,' said the Sultan, referring to the $20 bill.

Earlier, PM Lee flew in to receive a full ceremonial welcome in the morning.

Accompanying the PM on his two-day visit is his wife Ho Ching; Foreign Affairs Minister George Yeo; Trade and Industry Minister Lim Hng Kiang; Manpower Minister Ng Eng Hen; MP for Marine Parade GRC Muhammad Faishal Ibrahim; and senior officials.

PM Lee met Sultan Bolkiah and members of the Royal family, including the Sultan's brothers, sisters and children, at the Istana Nurul Iman in the afternoon.

It is understood that such a showing of Royal family members to welcome a foreign leader is uncommon, and reflects the close ties between both countries.

PM Lee and Sultan Bolkiah went on to have a four- eye meeting, before proceeding to the anniversary celebrations.

Before 1967, Brunei, Singapore and Malaysia were in a monetary union with a common currency. When the union fell apart, each country issued its own currency.

Singapore and Brunei then signed the pact, which has stood the test of time, said PM Lee. 'The benefits are evident in the healthy growth in trade.'

PM Lee hoped the new $20 notes will heighten awareness of the currency pact among the younger generation, who may not have been born when it was inked.

Some retailers in Singapore may also not be familiar with it, as there have been complaints of businesses refusing the Brunei currency.

In the evening, both leaders reaffirmed their countries' longstanding and special ties, at a banquet hosted by Sultan Bolkiah.

'It is a relationship tested by time, and underpinned by strong personal ties, with regular exchanges at all levels,' PM Lee said.

Sultan Bolkiah, in his speech, said: 'We're linked at very deep levels of understanding, friendship and cooperation.'

sueann@sph.com.sg