Brunei Dollar – Currency Overview

• ISO Code: BND
• Symbol: B$
• Subunit: 1/100 sen
• Inflation: 0.4%
• Nickname: ----

Historical Overview

Brunei became an independent sultanate after breaking away from Javanese rule in the mid 1400. Then in 1888 Brunei became a British protectorate and in 1905, a British dependency. After its occupation by the Japanese in the Second World War Brunei passed through many administrational protections until finally it achieved full independence in 1984.

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With the establishment of the British protectorate, the Straits Settlement Dollars was introduced as legal tender in Brunei, with one STSD equaling 28 British pence. From the 19^th century and until 1967 Brunei had been using Singapore's monetary system. The Brunei Dollar is in fact still linked to the Singapore Dollar. Under Japanese occupation, Japanese Gumpyo Dollars came into circulation at par with the STSD. The Straits Settlement fell apart in 1946, and the Malayan Dollar was brought in as a replacement for the Straits Dollar at par. In June of 1967, Brunei established its own currency board which then began issuing its own currency later that same year. The currency was tied to the Singapore dollar.

Brunei and Singapore still have an interchangeability agreement, signed back in 1967. The agreement stated that Singapore, Brunei and Malaysia would accept the legal tender of each country in the agreement, however Malaysia backed out of the agreement in 1973. The Brunei and Singapore Dollars are still interchangeable to this day.

Current Global Status

The Brunei dollar is pegged to the Singapore dollar, which makes it an unlikely choice for foreign exchange speculators. That being said, Brunei has a very wealthy economy, which relies almost entirely on petroleum and petroleum prices, and is therefore very susceptible to changes in global oil prices. This means that a fluctuation in oil prices is a good indicator of fluctuations in the currency of Brunei, and thus a good trading opportunity for foreign exchange speculators.

Against the USD

In the late 1990s to early 2000s, due to the instability in oil prices and the Asian financial crisis, the Brunei dollar was consistently trading at the rate of around 1.7 against the USD. Since the American financial crisis however, the Brunei Dollar has gained considerable ground and is now trading at a rate of around 1.4 against the USD. Recent up-trends in the rate of the US Dollar suggest that this rate may not hold up for long.

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