Here’s Why SGD is Always 1:1 With Brunei Dollar & How M’sia Was Involved

The Blue Cats’ Instagram:

Singapore and Brunei maintain a perpetual 1:1 exchange rate, allowing their currencies to be used interchangeably in both countries. Historically, Singapore, Malaysia, and Brunei were all part of the British Empire, which controlled nearly 23% of the world’s population at its peak. Before 1953, different regions used various currencies – Malaya and Brunei used Malayan dollars, while other areas had their own monetary systems, creating confusion in regional trade.

To simplify commerce, from 1953 onwards, the entire region adopted the unified Malaya and British Borneo dollar. After Singapore and Malaysia gained independence, they wanted separate national currencies but needed to maintain close trading relationships. In 1967, Singapore, Malaysia, and Brunei signed the Currency Interchangeability Agreement, a memorandum of understanding allowing banks in each country to accept the others’ currencies at par value without charge.

The agreement initially pegged all three currencies to the British pound at a 1:1 ratio, similar to how some cryptocurrencies are pegged to the US dollar. However, they quickly delinked from the pound when Britain devalued it, making it cheaper against the USD. The arrangement facilitated easier regional trade by eliminating exchange rate fluctuations between the participating countries.

Malaysia withdrew from the agreement in 1973 due to changing global monetary policies. During the early 1970s, countries began moving away from fixed exchange rates after the collapse of the Bretton Woods system, which had pegged many currencies to the USD since 1944. Domestic problems in the US from 1971 caused significant USD fluctuations that negatively affected other pegged currencies. While Malaysia left to establish an independent floating currency, Singapore and Brunei maintained their 1:1 parity, which continues today and explains why Singaporeans can use Brunei dollars locally.