The Indian Rupee is the official currency of the Republic of India. It is accepted in a few neighboring countries like Nepal. But did you know that it was once used as the official currency by the Gulf countries until a few decades ago? Also, the Reserve Bank of India issued special currency known as the Gulf Rupee or the Persian Gulf Rupee. This was used in the Persian Gulf countries and in the Arabian peninsula as an official currency between 1959 to 1970.

History of the Indian Rupee

India was a British colony and so were many others. Some colonies were governed by the British from India. Also, India to Europe was a major trade route. All this led to many countries adopting the Indian Rupee as their official currency. For several years, the Indian Rupee was officially used in regions controlled by the British such as East Africa, Strait Settlements, and the Gulf countries. It was eventually replaced by the countries’ own currencies, but the states within the Gulf countries were still using the Rupee in 1959.

The currency being circulated in the Gulf was bought by the Gulf states from the Reserve Bank of India in exchange for sterling reserves, which were held by India. However, soon, the smuggling of Indian currency to the Gulf began. This smuggled currency was used to buy gold and smuggle it into India. It was illegal in India at that time to import or export gold.

The Gulf Rupee

The smuggled rupees were more than what was required to be circulated in the Gulf. So, it was sent back to India via official channels and was used to purchase pound sterling. This followed that India was effectively paying for the illegal import of gold through its foreign exchange reserves. In 1957 and 1958, the existing problem of smuggling increased to magnitudes that were deeply concerning.

The Indian government, in agreement with the governments of the Gulf and the Bank of England, decided to introduce a special currency for the Gulf. It was called the Gulf Rupee. This was done under the Reserve Bank of India (Amendment) Act 1959. Many countries including Kuwait, Qatar, Oman, Muscat, and Bahrain used the Gulf rupee as their official currency after this.

How the Gulf Rupee looked

The Gulf rupees looked quite similar to the Indian rupees that were being circulated in India. But the color of the banknotes of the same denomination was different for the Indian rupee and the Gulf rupee. Also, the Gulf rupee was payable only ‘at Bombay’ as opposed to ‘at any office of issue’ for the Indian rupee. And, the serial number on the Gulf rupee was prefixed by a ‘z’.

These banknotes were issued in the denominations of 5, 10, and 100. The Government of India issued the one rupee notes.

When did the Gulf Rupee cease to exist

India devalued the rupee on June 6, 1966. Several states then adopted their own currencies. Qatar and many of the Trucial States started using the Qatar and Dubai riyal. Abu Dhabi started using the Bahrain Dinar. Only Oman kept using the Gulf rupee until 1970. Oman came up with its own rial in 1970.

Interesting, isn’t it? You might also want to read about why we need to save tigers at Save the Tiger. Know Why and Know How!


Prachi Tulankar

Author: Prachi Tulankar Prachi is a professional content writer. An Electrical engineer, she has worked in the software industry and also as a trainer in cognitive skills enhancement before turning to content writing. She enjoys good movies, good food, and above all, good books. It was her passion for reading that eventually led her to start a career in writing. She believes that you can never be too tired in life as long as there’s coffee and never too sad in life as long as there’s dark chocolate. She believes in the simple pleasures of life and knows that a little love can make everything better! She can be contacted by email on

One response to “Gulf Rupee – The Indian currency which went ‘foreign’ not too long ago!”

  1. Chandra Prakash Nigam says:

    1 Rupee Persian Gulf Note of India Government issued on 11/05/1959 signed by A.. K. Roy in extra fine condition is offered for sale.
    10 Rupees Persian Gulf Note of India Government having a misprint and signed by H.V.R Iyengar in extra-fine condition is offered for sale.
    Interested buyer may please contact me at whatsapp no 9199533956

Leave a Reply

Your email address will not be published. Required fields are marked *

ERP Training
Sponsored $150 28 Clicks
Sponsored $110 15 Clicks
Sponsored $100 16 Clicks
RKV Adventure
Sponsored $100 14 Clicks
Sponsored $100 27 Clicks

You May Also Want To Read This