Indian Rupees in Kuwait

February 2, 20190 Comments

During the early to mid-20th century, the Indian rupee was extensively used as currency in countries around the Persian Gulf and Arabian Peninsula.


In order to reduce the strain put on India’s foreign reserves by gold smuggling caused by external use of the Indian rupee, a separate currency was created. The Government of India introduced the Gulf rupee in 1959 as a replacement for the rupee, for circulation exclusively outside the country. At the time, the Indian rupee was pegged to the pound sterling at a rate of 13⅓ rupees = 1 pound.



Two countries, Kuwait and Bahrain, replaced the Gulf rupee with their own currencies (the Bahraini dinar and the Kuwaiti dinar) after gaining independence from the United Kingdom in 1961 and 1965, respectively. Even today, 100 fils in Bahrain are referred to as “rupee” or “rubiya” in common Arabic parlance.


On June 6, 1966, India devalued the Gulf rupee. To avoid following this devaluation, the countries that previously adopted the rupee created their own currencies. Qatar and six of the seven Trucial States adopted the Qatar and Dubai riyal, whilst Abu Dhabi adopted the Bahraini dinar. Muscat and Oman continued to use the Gulf rupee until 1970, with the government backing the currency at its old peg to the pound. Later in 1970, Oman replaced the rupee with the Omani rial.


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