Technical Terms

Brunei dollar also popular as ringgit Brunei in Malay language, is the national currency of the State of Brunei and is one of the major dollar dominated currencies in Asia. The country switched over to the currency from Malay and British Borneo dollar in 1967. Like almost all the dollar currencies are denoted, Brunei dollar also, is denoted with "$" sign, and to differentiate from other dollar currencies, with "B$" sign alternatively. "Sen" forms the sub unit of the currency and breaks 1 unit into 100 equal parts. Brunei dollar has its ISO 4217 currency code as BND and numeric code as 096.

Overview

The economy of Brunei is counted among the fairly successful economies in the world. Crude oil and gas provide cushion and are the major revenue sources for the country. Though, often looked upon as a diversified economy due to a mixture of foreign, domestic and government participation, it is effectively bound by its strong currency. Brunei dollar is pegged with the Singapore dollar, the latter being the official currency of country’s major trading partner. Moreover both the currencies have same values and are accepted as a customary tender in the other country. The import of local currency in the country does not have any limit amount and the import of other foreign currencies is free but before that it has to be declared except Indian banknotes. The limit for export of the local currency is $1000 in banknotes. In recent developments, polymer banknotes were also issued and circulated for the smaller values of the notes to counter forgery.

Before the time when proper currency coins were issued in Brunei, cowry shells formed the part of currency system. Also, bronze teapots were exchanged in the barter trade regime. But in 1868, the country issued tin coins valued in ½ and 1 pitis. This was the time when the concept of a proper and consistent currency got induced. In 1888, the British took over the control of the country and introduced the straits dollar as the new currency and the first 1-cent coin was minted. As a British colony, Brunei had to use straits dollar as its currency for a long time and then the Malayan dollar came into existence in around 1940. For 13 years, the Malayan dollar was accepted as a legal tender till it got replaced by the Malaya and British Borneo dollar.

In 1967, Brunei started issuing its own currency in the form of Brunei dollar with the coming of the currency act and the establishment of the Brunei currency board. Till date, three issues of coinage have been made in 1967, 1968 and 1996 respectively. Also, in context of banknotes, four issue have been since 1967

• 1967 issue - the front sides of notes depicted the portrait of the late Sultan Sir Omar Ali Saifuddin
• 1968 issue - the portraits were replaced by the portraits of Sultan Hassanal Bolkiah
• 1989 issue - this was the first post independence bank note series having two versions of the $50 note
• 1996 issue - polymer series

The volatility in the foreign exchange rates depends upon a numerous macro economic factors that have different degrees of importance to different economies of the world. Some special and exceptional factors affecting the rates may also exist in the case of different countries. Following are shown the common factors on which the foreign exchange rate depends

• Flow of imports and exports between the countries
• Flow of capital between the countries
• Relative inflation rates
• Fluctuation limits on exchange rate imposed by the governments of the countries
• Merchandise trade balance
• Rate of inflation in the country
• Flow of funds between the countries for the payment of stock and bond purchases
• Relative growth
• Short term and long term interest rate differentials
• Cost of borrowings