History of Gulf Rupees & Haj Notes I Why Indian Rupee used as official currency in Gulf countries

History of Gulf Rupees & Haj Notes I Why Indian Rupee used as official currency in Gulf countries

History of Gulf Rupees & Haj Notes | Why Indian Rupee used as official currency in Gulf countries ?

Hi friends, do you know that the Indian rupee was once the official currency of the Gulf States? Well then this should be a story that interests all history fans and numismatic out there.

The interesting fact that many people might not be aware of today is that the currency issued by the Reserve Bank of India was once the official currency in the Gulf region till 1970.

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Before going to that, let us check the history of the rupee which traces back to the ancient Indian subcontinent. The word rupee is derived from a Sanskrit word Rupia which means shaped silver or something stamped with an image Arthashastra written by Chanakya who was the Prime Minister to the first Maoriya.
Emperor Chandrabta Maurya mentions silver coin as rupee, Ruba, gold coins as sarnaruba, copper coins as Tamra, Ruba, etc. And in the intermediate times there was no fixed monetary system in India.
Sheikhsuri during his five year rule issued a coin of silver weighing 178 grains which was also termed Rupia. The silver coin remained in use during the Mughal period, Maratha era as well as in British India.

History of Gulf Rupees & Haj Notes I Why Indian Rupee used as official currency in Gulf countries
History of Gulf Rupees & Haj Notes I Why Indian Rupee used as official currency in Gulf countries












During British rule and the first decade of independence, the rupee was divided into 16 Anas.
Each Anna was subdivided into four paisas, so Rs1 was equal to 64 paisa. In 1957, decimalization occurred and the rupee was divided into 100 nae paisa which means new paisas in Hindi or Urdu.
There is a famous Malayana movie song in which the Naya paisa is mentioned. Let’s hear a line from it.
A few years the initial Naya was dropped. Now is the interesting part. For almost 200 years, from
1763 to 1971, the British Empire maintained varying degrees of political control over the Persian Gulf States. The regions include the presentday UAE which was then known as Crucial States, as well as Bahrain, Qatar, Kuwait and Omar. Prior to the oil boom that started in the region in 1960s, these regions were not very economically advanced.
There was no currency system in the region like there was in other developed nations. Business was restricted to trading in dates, camels fishing and Pearl diving. Since the economies of these kingdoms were so small, meaning their own coins was not practical to them. Therefore, they used the currency of the largest nation nearest to them and this happened to be India which was also under the rule of British.

During that time as many as 20 countries at one point in different parts of the world were
using Indian rupee as their official currency at that time till 1957.
All the currency notes that were used in DUI were also used in the Gulf region. However, all that began to change when an issue arose. Historically, Indians were very interested in gold.

Huge quantities of gold were imported into India through Gulf States. After 1947, the government of the newly independent India wanted to restrict this and put heavy duties on gold imports.
This led to large scale smuggling of gold into India. Mostly from the Gulf countries. In 1957, the
special nodes, called external rupees or Gulf rupees, were printed in India for circulation in the Gulf.
These special notes were introduced to control the widespread gold smuggling that happened in the region. The Gulf rupee notes were in many ways identical to the Indian rupee notes.
However, while the design was the same, the color was completely different and also its number
series. These new nodes came in denominations of rupees 1510 and 10. The exchange rate was
settled at 141.

In addition to the crucial States, other GCC countries like Bahrain, Kuwait, Oman and Qatar also used them. The only country not using them was Saudi Arabia.
Haj Notes
Interestingly, at a time when the Gulf rupee notes were introduced, the Reserve Bank of India also realized that a number of Indian rupee notes were being taken by Haj pilgrims to Saudi Arabia each year.

These were then returned to the Reserve Bank of India in Bombay to ensure that no smuggled rupees could be returned from the Persian Gulf via Saudi Arabian banks, the Reserve Bank of India also introduced two special Haj notes of Ten and RS100. These Haj notes two were of different colors from the ones used in India. The word Haj appears to the left and right of the Reserve Bank of India at the top of the notes and have a different series number. The gulf rupee did not, however, remain in circulation for long due to many economic and political changes in the
Persian Gulf, countries.
In the decade of the States began issuing their own currencies. Massive oil reserves were discovered in the region during this time and soon big money began rolling into this month’s backward economies. Kuwait was the first Gulf state to introduce its own currency, the Kuwaiti Dinner. In 1961, Bahrain introduced its own currency, which was the Bahraini Dinah. Four years later, in 1965.
Then, on 6 June 1966, Indira Gandhi’s government devalued the Indian rupee. By almost 57%, Gulf States faced their concerns with the Indian government about the impact such a move would have on their economies. Despite their protests, the devaluation took place and the Gulf States had no option but to stop using the Indian rupees as legal tender. Thus, by the end of 1966, almost all States had replaced the Indian rupees in circulation, either with Saudi Riyas or Bahraini Dinahars. Only Oman continued to use the Gulf rupee till 1970, when each tool introduced its own currency, which was the Omani Rial.
With this, the Gulf rupee as well as the Hajj nodes were withdrawn from circulation. Today, these
nodes are quite popular among numismatic collectors, both in India as well as Gulf States. Some old Arabs are still using the word rupee for mentioning their new currency, through which we can realize the historical relationship between India and the Gulf region. Hope you found this information useful. Please comment your Opinions down below.

Checkout Haj Notes of India

Thank you for Reading.

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