1967 Penang Hartal riot

The riot began as a peaceful protest organised by the Labour Party over the devaluation of the Malayan dollar against the British pound sterling.^[1]

Malaysian at that time had two currencies in circulation. One was the old Malayan dollar and the other was the new Malaysian dollar. Both were trading at par and valued at 8.57 dollars per pound. The pegging of the local currency to the pound was part of Malaysia's membership in the Sterling area.^[2] The new Malaysian dollar was introduced on June 12, 1967 as the currency union between Malaysia, Singapore and Brunei came to an end.^[3] Singapore was expelled out of Malaysia on August 9, 1965.

Five months after the introduction of the new Malaysian dollar, the United Kingdom government which was already struggling from the burden of post-World War II rebuilding decided to devalue the pound sterling by 14.3% against the US dollar as part of effort to improve its national competitiveness. Then Prime Minister, Tunku Abdul Rahman took the opportunity to devalue the old Malayan dollar by 15% against the pound by and the new Malaysian dollar.^[1]

The devaluation caused much disagreement among Malaysians who held the old currency, which led to the organisation of the hartal.^{[citation needed]}