What is the BND (Brunei Dollar)
The Brunei dollar (BND), is the official currency of the Sultanate of Brunei. In written language, the symbol B$ is often used to distinguish the Brunei dollar from other dollar currencies. The Brunei dollar subdivides into 100 sen, known as cents in English. The official name of the country is the Nation of Brunei, the Abode of Peace or Brunei Darussalam.
BREAKING DOWN BND (Brunei Dollar)
The Brunei dollar (BND) pegs its value to the Singapore dollar (SGD) at par, making the two currencies functionally exchangeable. The Monetary Authority of Brunei Darussalam currently issues the Brunei dollar and handles policies involving national monetary policy.
Between the 16th and 19th centuries, Brunei used coins called pitis as currency. The Straits dollar replaced the earlier coins in 1906. At this time, Brunei existed as a British protectorate. In 1939, the Board of Commissioners of Currency in Malaya introduced the Malayan dollar. The Malaya dollar and the British Borneo dollar followed, in 1953, when the Board expanded its issue to Singapore, Sarawak, and British North Borneo.
By 1967, the Malaya and British Borneo dollars split into three distinct currencies, the Brunei dollar, the Malaysian dollar, and the Singapore dollar with the beginning of the Currency Interchangeability Agreement. Through the Agreement, the banks of each country agreed to accept the other's coin at par and without charges. Under the terms of the agreement, while neither nation recognizes the other’s currency as legal tender, they do agree to accept it as “customary tender.” In 1973 the Malaysian government removed itself from the Currency Interchangeability Agreement leaving only Singapore and Brunei.
Brunei would gain its independence from the United Kingdom in 1984.
Brunei Currency Board and Economy
The Brunei Currency Board was established to issue the Brunei dollar in 1967 when the Malaya and British Borneo dollars split. Since that time, Brunei had changed the form and duties of the entity twice. In 2004, the name changed the name to the Brunei Currency and Monetary Board. This Board would exist until the Monetary Authority of Brunei Darussalam assumed its duties in 2011.
The current monetary authority’s published objectives includes the maintenance of domestic price stability, regulatory efforts to ensure the financial system’s stability, assistance in the establishment of efficient payment systems, and the development of a progressive financial services sector.
Despite Brunei’s relatively small size, its per capita GDP is high. Brunei is a major regional oil producer and also produces a substantial amount of natural gas. According to the 2017 World Bank data, Brunei is a high-income nation. It gross domestic product (GDP) is experiencing a 1.3% growth. However, the inflation deflator per year is at 5.0-percent.
The government has also been encouraging diversification in its economy. The primary focus for diversification within the country are agriculture, fishing and food industries, as Brunei’s meat supply currently comes mainly from a government-owned cattle farm based in Australia. Petroleum products make up the majority of the country’s exports. Brunei's major trading partners include Japan, South Korea, Thailand, India, Singapore, Malaysia, China, Australia, and New Zealand.