The Indian Rupee’s Gulf Connection
It is hard to imagine, but till even 1970, you could have found currency issued by the Reserve Bank of India, in circulation as the official currency in the Gulf region. Till as late as the 1960’s and the oil boom, countries including UAE, Qatar, Bahrain, Kuwait and Oman used the Indian Rupee as their official currency. Specially issued by the Reserve Bank of India, the ‘Gulf Rupees’, as they were called, reflected the close historic, political and commercial ties between India and the region.
For almost two hundred years from 1763 to 1971, the British Empire maintained varying degrees of political control over the Persian Gulf states. The region encompassed the various sheikhdoms and principalities of the present day United Arab Emirates (UAE) as well as Bahrain, Qatar, Kuwait and Oman. Prior to the oil boom that started in the region in 1960s these principalities were not very economically advanced. Commerce was restricted to trading in dates, camels, fishing and pearl diving – Basra, in Iraq was home to the worlds most coveted and expensive natural pearls . But the economies of these kingdoms were so small, that it didn’t even make sense for them to mint their own currency. As a result, they used the Indian Rupee, minted in India by the British East India Company and then the Government of British India, instead.