Malaysia is a federation of different states. Negeri Sembilan, Pahang, Perak and Selangor joined to form the Federated Malay States on July 1, 1896. Malacca and Penang joined these four states on April 1, 1946 to form the Malay Union, which was renamed the Federation of Malaya on February 1, 1948. The Federation included Johore, Pahang, Negri Sembilan, Selangor, Perak, Kadah, Perlis, Kelantan and Trengganu. Malaya gained its independence on August 31, 1957. On September 16, 1963, Sabah (British North Borneo), Sarawak and Singapore joined Malaya to found Malaysia. On August 9, 1965, Singapore withdrew from Malaysia.
The first Malaysian coins were small tin pieces, inscribed in Arabic, that were struck by Muzaffar Shah, Sultan of Malacca (1446-59). Chinese coins had been exported to Malaysia in the tenth century. The Portuguese captured Malacca in 1511 and D’Albuquerque, the first Portuguese governor of Malacca, issued the first European coins. In 1641 the Dutch East India Company seized Malacca.
The Sultanate of Johore also issued gold and tin coins in the sixteenth century, and the sultans of Kedah, Patani, Kelantan and Trengganu followed with gold coins and tin in the seventeenth century. The Sultanates issued these coins until the nineteenth century. Silver coins were provided by importing Spanish silver dollars.
The East Indies Company Dollar (XEID) was used in Malaysia from 1788 to 1858, and became the predecessor to the Straits Settlement Dollar (STSD), which replaced it at par in 1858. In 1826, the British settlements of Malacca, Penang and Singapore were unified as the Straits Settlements. All government issues of currency and coins were considered to be part of the Straits Settlements Dollar currency area, and were issued by the colonial governments from 1858 until World War II. Spanish, Republican Mexico, Japanese and US silver dollars circulated in the Straits Settlements. The first British-made dollars, minted in Hong Kong, appeared in 1895, and the first Straits silver dollars were minted in 1903.
Legal tender was issued by India for the Straits Settlements in 1862, by the Government of the Straits Settlements from 1871 until 1941, by the Government of Sarawak (Sarawak Dollar-SWKD) from 1863 until 1941. Sarawak Dollar banknotes and Straits Settlement coins circulated within Sarawak. Sarawak had a currency board before the war. Sarawak did not issue any banknotes after the war, and the Malayan Dollar became the sole legal tender issue in Sarawak on January 1, 1953.
Banknotes were issued in Sabah (North Borneo) by the British North Borneo Company (British North Borneo Dollar-BNBD) from 1867 until 1941. Notes were issued by the British North Borneo Company until March 1921 when the notes were issued by the State Bank with headwuarters in Sandakan. Although the notes still said British North Borneo Company on them, they were government issued banknotes. The British North Borneo Dollars ceased to be legal tender on September 1, 1953. The Straits Settlement Dollar was also used in Brunei, and Ringgit is Malay for Dollar. The Dollar is divisible into 100 Cents. In addition to the colonial coins issued by British authorities, up until 1909, local Malaysian states issued their own Ringgit coins (MYSR).
The Board of Commissioners of Currency, Straits Settlements was established on May 1, 1899, and the Straits Settlement Dollar (STSD) became legal tender on July 3, 1903 with 1 STSD equal to 28 Pence Sterling. All government issues of currency and coins were considered to be part of the Straits Settlements Dollar currency area, and were issued by the colonial governments from 1858 until World War II. The Commissioner of Currency for Malaya was formed in 1938 to issue Malayan Dollars (MYAD) because Malaya was allowed to join the currency board and share in the seignorage. Prior to this, Malaya had used Straits Settlement Dollars, but had not been part of the currency board.
During the Japanese occupation of Singapore, the Japanese issued Gumpyo Dollars (MYAG) set at par with the Straits Settlement Dollar. Malayan Dollars were allowed to circulate, but were hoarded. The Straits Settlements were dissolved and the currency board resumed operations on April 1, 1946. The Board of Commissioners, Malaya was the issuing authorities for Malayan Dollars from 1946 until January 1, 1952 when the Board of Commissioners of Currency, Malaya and British Borneo was established as the note-issuing authority.
When Malaysia was founded in 1963, the Bank Negara Malaysia took over the issuance of currency and created the Malaysian Ringgit (MYR) at par with the Malayan Dollar. The Interchangeability Agreement of 1967 between Brunei, Malaysia, and Signore provided that effective 12 June 1967, banks and monetary authorities in each country would accept the notes and coins of the other two countries without charging exchange fees. Malaysia ended the agreement between itself and Singapore on 8 May 1973. Brunei and Singapore continue to have an agreement in force today.