Gulf rupee
Encyclopedia
The Gulf rupee, also known as the Persian Gulf rupee (ISO 4217
code: XPGR), was a currency
used in the countries of the Persian Gulf
and the Arabian Peninsula
between 1959 and 1966. It was issued by the Government of India
and the Reserve Bank of India
and was equivalent to the Indian rupee
.
in 1959 as a replacement for the Indian rupee, for circulation exclusively outside the country. At the time, the Indian rupee was pegged to the British pound at a rate of 13⅓ rupees = 1 pound.
Two states, Kuwait
and Bahrain
, replaced the Gulf rupee with their own currencies (the Kuwaiti dinar
and the Bahraini dinar
) after gaining independence from Britain in 1961 and 1965, respectively. However, even today, in Bahrain 100 fils (one tenth of a Bahraini dinar
) are referred to in Arabic
as a "rupee" or "rubiya" in common parlance.
On 6 June 1966, India devalued the rupee. To avoid following this devaluation, several of the states using the rupee adopted their own currencies. Qatar and most of the Trucial States adopted the Qatar and Dubai riyal
, whilst Abu Dhabi adopted the Bahraini dinar
. Only Oman continued to use the Gulf rupee, until 1970, with the government backing the currency at its old peg to the pound. Oman replaced the Gulf rupee with its own rial
in 1970.
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ISO 4217
ISO 4217 is a standard published by the International Standards Organization, which delineates currency designators, country codes , and references to minor units in three tables:* Table A.1 – Current currency & funds code list...
code: XPGR), was a currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
used in the countries of the Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...
and the Arabian Peninsula
Arabian Peninsula
The Arabian Peninsula is a land mass situated north-east of Africa. Also known as Arabia or the Arabian subcontinent, it is the world's largest peninsula and covers 3,237,500 km2...
between 1959 and 1966. It was issued by the Government of India
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
and the Reserve Bank of India
Reserve Bank of India
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of...
and was equivalent to the Indian rupee
Indian rupee
The Indian rupee is the official currency of the Republic of India. The issuance of the currency is controlled by the Reserve Bank of India....
.
History
In the early to mid 20th century, the Indian rupee was extensively used as currency in the countries of the Persian Gulf and Arabian Peninsula. To reduce the strain put on India's foreign reserves by gold smuggling caused by this external use of the rupee, a separate currency was created. The Gulf rupee was introduced by the Indian governmentGovernment of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
in 1959 as a replacement for the Indian rupee, for circulation exclusively outside the country. At the time, the Indian rupee was pegged to the British pound at a rate of 13⅓ rupees = 1 pound.
Two states, Kuwait
Kuwait
The State of Kuwait is a sovereign Arab state situated in the north-east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the...
and Bahrain
Bahrain
' , officially the Kingdom of Bahrain , is a small island state near the western shores of the Persian Gulf. It is ruled by the Al Khalifa royal family. The population in 2010 stood at 1,214,705, including 235,108 non-nationals. Formerly an emirate, Bahrain was declared a kingdom in 2002.Bahrain is...
, replaced the Gulf rupee with their own currencies (the Kuwaiti dinar
Kuwaiti dinar
The dinar is the currency of Kuwait. It is sub-divided into 1000 fils. It is the highest-valued currency unit in the world.-History:...
and the Bahraini dinar
Bahraini dinar
The dinar is the currency of Bahrain. It is divided into 1000 fils . The name dinar derives from the Roman denarius. The dinar was introduced in 1965, replacing the Gulf rupee at a rate of 10 rupees = 1 dinar. The Bahraini dinar is abbreviated .د.ب or BD...
) after gaining independence from Britain in 1961 and 1965, respectively. However, even today, in Bahrain 100 fils (one tenth of a Bahraini dinar
Bahraini dinar
The dinar is the currency of Bahrain. It is divided into 1000 fils . The name dinar derives from the Roman denarius. The dinar was introduced in 1965, replacing the Gulf rupee at a rate of 10 rupees = 1 dinar. The Bahraini dinar is abbreviated .د.ب or BD...
) are referred to in Arabic
Arabic language
Arabic is a name applied to the descendants of the Classical Arabic language of the 6th century AD, used most prominently in the Quran, the Islamic Holy Book...
as a "rupee" or "rubiya" in common parlance.
On 6 June 1966, India devalued the rupee. To avoid following this devaluation, several of the states using the rupee adopted their own currencies. Qatar and most of the Trucial States adopted the Qatar and Dubai riyal
Qatari riyal
The riyal is the currency of the State of Qatar. It is divided into 100 dirham and is abbreviated as either QR or ر.ق .- History :...
, whilst Abu Dhabi adopted the Bahraini dinar
Bahraini dinar
The dinar is the currency of Bahrain. It is divided into 1000 fils . The name dinar derives from the Roman denarius. The dinar was introduced in 1965, replacing the Gulf rupee at a rate of 10 rupees = 1 dinar. The Bahraini dinar is abbreviated .د.ب or BD...
. Only Oman continued to use the Gulf rupee, until 1970, with the government backing the currency at its old peg to the pound. Oman replaced the Gulf rupee with its own rial
Omani rial
The rial is the currency of Oman. It is divided into 1000 baisa .-History:Before 1940, the Indian rupee and the Maria Theresa Thaler were the main currencies circulating in Muscat and Oman, as the state was then known, with rupees circulating on the coast and Thaler in the interior...
in 1970.
Banknotes
Notes were issued in denominations of 1 rupee by the Indian government and 5, 10 and 100 rupees by the Reserve Bank of India. The notes were in designs very similar to the standard Indian notes but were printed in different colours. While the 1 rupee and 10 rupee notes were printed in red, the 5 rupee notes were printed in orange and the 100 rupee notes were printed in green. The serial numbers of the banknotes issued in all denominations were prefixed by a Z.Legislature
The following extract from the Reserve Bank of India Bulletin, May 1959, explains the measures taken by the Reserve Bank of India:
The Reserve Bank of India (Amendment) Act 1959, providing the issue of special notes of the Reserve Bank and the Government of India (one rupee notes), which are intended for circulation in certain territories outside India, was passed by the Lok SabhaLok SabhaThe Lok Sabha or House of the People is the lower house of the Parliament of India. Members of the Lok Sabha are elected by direct election under universal adult suffrage. As of 2009, there have been fifteen Lok Sabhas elected by the people of India...
on April 29, 1959 and the Rajya SabhaRajya SabhaThe Rajya Sabha or Council of States is the upper house of the Parliament of India. Rajya means "state," and Sabha means "assembly hall" in Sanskrit. Membership is limited to 250 members, 12 of whom are chosen by the President of India for their expertise in specific fields of art, literature,...
on April 30 and received the PresidentPresident of IndiaThe President of India is the head of state and first citizen of India, as well as the Supreme Commander of the Indian Armed Forces. President of India is also the formal head of all the three branches of Indian Democracy - Legislature, Executive and Judiciary...
's assent on May 1, 1959.
The Indian rupee has been serving as the traditional medium of exchange in the Persian Gulf States of KuwaitKuwaitThe State of Kuwait is a sovereign Arab state situated in the north-east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the...
, BahrainBahrain' , officially the Kingdom of Bahrain , is a small island state near the western shores of the Persian Gulf. It is ruled by the Al Khalifa royal family. The population in 2010 stood at 1,214,705, including 235,108 non-nationals. Formerly an emirate, Bahrain was declared a kingdom in 2002.Bahrain is...
, QatarQatarQatar , also known as the State of Qatar or locally Dawlat Qaṭar, is a sovereign Arab state, located in the Middle East, occupying the small Qatar Peninsula on the northeasterly coast of the much larger Arabian Peninsula. Its sole land border is with Saudi Arabia to the south, with the rest of its...
, the Trucial StatesTrucial StatesThe Trucial States were a group of sheikhdoms in the Persian Gulf.-General aspects:The sheikdoms included:*Abu Dhabi *Ajman...
and in parts of MuscatMuscat, OmanMuscat is the capital of Oman. It is also the seat of government and largest city in the Governorate of Muscat. As of 2008, the population of the Muscat metropolitan area was 1,090,797. The metropolitan area spans approximately and includes six provinces called wilayats...
, for a long time, and by custom the Government of IndiaGovernment of IndiaThe Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
and the Reserve Bank of India have been providing the currency for this circulation. Facilities have been provided to banks operating in the Persian Gulf States to exchange Indian currency notes collected by them for sterling. However, this currency arrangement has, in the last few years, facilitated the conversion into sterling of large amounts of Indian notes smuggled out, representing proceeds of smuggled imports of gold and other commodities into India, which entailed a substantial drain on India's foreign exchange reserves. The notes were transferred through various channels to banks in the Persian Gulf area, who tendered them to the Reserve Bank for redemption into sterling. There was no means of distinguishing currency taken out for legitimate trade transactions from currency taken out illegally for financing unauthorised transactions, chiefly gold imports.
Until 1956, the volume of smuggling activity and the redemption of Indian currency into sterling was not large, but in 1957 and 1958, the return of notes and the resulting loss of foreign exchange assumed large proportions. In recent months, smuggling operations appeared to have subsided somewhat, but it was felt that if the present arrangement continued, there would be no safeguard against a resumption of the drain of foreign exchange arising out of increased smuggling.
For these reasons, the Government of India decided to introduce a special series of India notes in replacement of the India notes now in circulation in the area. The amendment to the Reserve Bank of India Act was necessary, since the existing provisions did not provide for the issue of special notes which are not legal tender in India.
The new series of special notes will be identical with the existing series except for their colour and for a slight modification of the legend on the obverse, indicating they are payable "at the office of Issue at Bombay" instead of "at any office of issue" as in the case of the existing notes. The special issue will be in the denominations of Rs. 5, Rs. 10 and Rs. 100, besides one rupee notes of the Government of India. There will be no change in the value of the rupee and the special notes will be as much a liability of the Reserve Bank of India and the Government of India as the notes issued for circulation in India. The special notes will be freely convertible into Indian rupees. They will also be freely convertible into sterling under the existing procedure, under which Persian Gulf banks presented Indian currency notes in their possession to the Reserve Bank for redemption in sterling. The special notes will not be legal tender in India. There will also be no restriction on Indian rupee notes being brought into India by travellers.
The initial stage of the operations is the exchange of existing Indian currency into the new notes. For this, a period of six weeks from May 11, 1959 to June 21, 1959 has been allowed. The Reserve Bank has provided adequate exchange facilities for the exchange of existing notes into special notes at all the banks functioning in the Persian Gulf States and Muscat. Once the initial exchange is completed, further supplies of special notes will be obtainable by the Persian Gulf banks under the existing arrangements for obtaining notes from India, namely, through payment of sterling. The facilities for the exchange of Indian currency notes into sterling provided prior to the issue of the special notes will be withdrawn with effect from June 22, 1959 and the redemption into sterling will be limited only to special notes issued in exchange for those now in circulation plus future issues against which sterling will be received. The issue of special notes will not involve any additional liability because they replace notes already in circulation, while future issues will not involve any uncovered liability as each rupee will be issued only against equivalent receipt in sterling.
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