1 Dollar – Straits Settlements

By 1919, the Straits Settlements (comprising Singapore, Penang, and Malacca) operated under a unique and robust currency board system, the Straits Dollar. This system, established in 1906 and managed by a London-based Board of Commissioners of Currency, was designed for stability, with the local currency fully backed by sterling reserves held in London. The Straits Dollar was effectively a sterling exchange standard, pegged at a fixed rate of 2 shillings 4 pence.

The First World War (1914-1918) had placed significant strain on this system. While the peg was officially maintained, the war disrupted shipping and trade, causing a physical shortage of the silver coinage used in everyday transactions. This led to the increased use of banknotes and the emergence of a premium on silver coins. Furthermore, the war inflated the price of silver globally and saw Britain borrowing heavily, raising concerns about the absolute security of the sterling reserves backing the currency.

Consequently, in 1919, the currency situation was one of underlying tension within a formally stable framework. The authorities were grappling with the practical problems of coin scarcity and the broader economic uncertainties of the post-war world. This environment set the stage for a major review, culminating in the pivotal Currency Ordinance of 1920, which formally severed the link to silver and placed the Straits Dollar on a pure gold-exchange standard, though still anchored to sterling, to better navigate the volatile post-war financial landscape.