The Bank Notes of the Qatar and Dubai Currency Board

Qatar and Dubai are two Arab states in the Persian Gulf who are now linked to separate destinies, but for a period of years they shared a great deal in common--both being members of the Trucial States. Towards the end of that period in which they shared membership of the Trucial States, they joined to establish a common monetary union and for a period of six years they shared a common currency. To understand how the brief monetary union between Qatar and Dubai came into being, it is first necessary to understand the association of sheikdoms that became known as the Trucial States.

The loose association of states which bore this title originated in the coastal tribes of the Persian Gulf which had signed 'Perpetual Treaties of Peace and Friendship' with Great Britain. These treaties were the result of Great Britain seeking to stop piracy in the Gulf, and to subdue what was known in the early nineteenth century as the 'Pirate Coast'.

The first major effort of the British to subdue the pirates of the Gulf occurred in 1805 when a fleet was sent from India. While this force was able to drive the tribes of the coast into signing treaties with the British, the treaties were unable to be enforced due to the lack of a policing garrison. A number of expeditions to the area in the next fifteen years convinced the British that they needed to establish a base in the area, to ensure that all treaties were observed. To this end a force was subsequently stationed at Ras al Khaimah.

In 1853 the British signed perpetual maritime treaties with each of the rulers of the coastal tribes, in which they undertook to protect the people from external attack. These treaties were with the states that today form the United Arab Emirates, and following the signing of the treaties the area became known as Trucial Oman, or the Trucial States. In 1892 the links with Great Britain were strengthened, with each sheikdom signing a treaty which made them a British protectorate and which gave the British control of their defence and foreign affairs.

The sheikdoms of the 'Pirate Coast' had become the Trucial States in 1853, but the number of states falling under the tutelage of the British later increased--with Bahrain joining the protective federation in 1861 and Qatar in 1916. The association between the Trucial States and Great Britain continued well into the twentieth century, with Britain providing assistance and guidance during the economic decline of the pearling industry--the former mainstay of the states' economy--through to the discovery of oil and the economic prosperity which followed. However, by the middle of the twentieth century Britain was divesting herself of her colonial past and in 1968 she gave three years notice of her intention to withdraw her presence from the Gulf.

This notice was not sudden, and the British had taken care to provide an environment in which the states of the Gulf could move smoothly from the protection of the British to the full sovereignty of independent states. Evidence of this endeavour can be seen in the development of currency in the Gulf region.

For many years the Indian Rupee had circulated in those states in the Persian Gulf that were under British tutelage, but in 1959 the 'External Rupee', or Gulf Rupee as it became known, replaced the Indian Rupee as the official currency in the Trucial States. The Gulf Rupee was the result of an administrative decision by the government of India to isolate the internal accounting of their own currency from those areas which were using the Indian Rupee under agreement with the Reserve Bank of India. Kuwait subsequently introduced their own currency in 1961 and Bahrain followed with its currency several years later in 1965.

Efforts to encourage the Trucial States to take further responsibility for their economic future led to the signing of the Arabian Gulf Currency Agreement on 7 July 1965 by Qatar, Dubai, Abu Dhabi and Bahrain. Under this agreement a monetary union was to be formed and a common currency introduced for circulation in each state. However the implementation of this agreement became frustrated--so Qatar and Dubai decided to form their own monetary union, signing the Qatar-Dubai Currency Agreement on 21 March 1966. The agreement provided for the introduction of a common currency for the two states and the establishment of a Currency Board.

The Qatar and Dubai Currency Board was responsible for issuing and managing the new currency, and for maintaining the external reserves which backed the currency. There were five directors of the Currency Board, with each state providing two directors, while the fifth director was to be an expert in banking and finance from a country outside the Gulf. The five directors appointed to the Board (and who remained in office during the entire life of the Currency Board) were:

The Board was located in the Old Government House in Doha (the capital of Qatar) where the manager and staff undertook the day-to-day business of the Board. The first manager of the Board was Mr. P. H. C. Brader, who was succeeded in turn by Mr. D. S. Lewis, Mr. W. G. Balfour, Mr. L. P. Tempest and Mr. M. M. Al-Majed. Agents for the Board were the Qatar National Bank and the National Bank of Dubai.

While the Board was a joint venture between the two member states, Qatar was without doubt the senior member of the Board. This seniority can be seen in that the Board was located in Doha, the chairman of the board was from Qatar, and there was a greater circulation of notes in Qatar than in Dubai. However the telling point in the seniority of Qatar is that, although the original agreement stipulated that the backing for the currency, and the deficiencies and profits from the Board should be shared between both states, a subsequent agreement signed on 29 October 1966 made Qatar solely responsible for the finances of the Board. This agreement was made to favour the government of Qatar, because it had undertaken the responsibility of depositing 5,614,473 with a number of banks in London to cover the entire currency issue. As it had taken this responsibility, it also took the responsibility for profits and losses.

Under the Qatar-Dubai Currency Agreement, the new currency to be introduced was to be called the 'Qatar and Dubai Riyal'. It was defined to be equivalent to one and a half shillings sterling, have a parity of 0.186621 grammes of gold, and it was to be divided into one hundred dirhams. Orders for new coins and bank notes were placed with the British Royal Mint and Bradbury Wilkinson and Company Limited immediately after the signing of the Currency Agreement. However the situation in Qatar and Dubai was thrown into turmoil when the Indian Rupee was devalued on 6 June, some months before the new currency could be delivered.

The announcement of the devaluation of the Indian rupee caused a great deal of concern in the Gulf states, as it was not immediately apparent whether the devaluation applied to the 'Gulf rupees' as well as the Indian rupees. Following clarification from the Reserve Bank of India that the devaluation did affect the Gulf rupees, the Gulf states moved quickly to protect themselves from speculators, as the banks within the Gulf states were still exchanging the Gulf rupees for the pre-devaluation rates. Qatar halted all air travel into Qatar for several days, and the banks suspended trading in Indian and Gulf rupees until the ramifications of the devaluation could be fully understood. In order to protect their economies, the governments of Qatar and Dubai promised that, when possible, the Gulf Rupees would be exchanged for the new currency at pre-devaluation rates. However, in order to halt speculation in Gulf Rupees, it was deemed prudent to withdraw them from circulation in the two sheikdoms as soon as possible. To this end an agreement was made with the Saudi Arabian Monetary Agency to borrow one hundred million Saudi Arabian riyals to provide a circulating currency prior to the arrival of the new Qatar and Dubai riyals.

Consequently the Gulf Rupees were withdrawn from circulation towards the end of June 1966 (ceasing to be legal tender in Qatar and Dubai shortly after), and Saudi riyals entered circulation. The use of Saudi riyals by Qatar and Dubai continued for a number of months, but by mid-September 1966 sufficient notes had been delivered from Bradbury Wilkinson and Company to allow the release of the new currency. So, on 18 September 1966, Qatar and Dubai riyals were made available to the public in exchange for Saudi riyals. The exchange rate for the replacement of Gulf Rupees by Saudi riyals had been 100 Saudi riyals for 106.5 Gulf rupees; and the new currency was now exchanged at the rate of 106.5 Qatar and Dubai riyals for 100 Saudi riyals. The total value of new bank notes placed in circulation during the period of exchange was 73,944,065 Qatar and Dubai riyals.

The notes issued by the Qatar and Dubai Currency Board consisted of six denominations, these being one, five, ten, twenty-five, fifty and one-hundred riyals. The notes are all similar in design but each denomination increases in size with its value, and each denomination has different colours. The common design for the face of the notes consists of a vignette of a dhow, oil rig and palm trees enclosed in a circle to the left, while to the right is a circle, of the same size as that surrounding the vignette, which holds a plain area suited for viewing the watermark. The watermark for each denomination is a falcon's head, and a solid security thread runs vertically through the notes at left of centre.

The text on the face of the notes is written in Arabic and is split into four areas. In a panel at the top of the notes is the title of the issuing authority: 'The Qatar and Dubai Currency Board'. In the centre of the note is the value of the note in words, under which appears the legal tender clause. Finally, at the lower centre is the signature, which is that of Khalifa Bin Hamad Al-Thani, and his designation, which is 'Chairman of the Currency Board'. (The signature is printed in black, while the designation is part of the plate printing.) The value of each denomination appears in small panels on each corner of the notes. On the reverse of each note the title of the Currency Board is written in English across the top of the note, with the denomination appearing in numerals in the centre and in the top two corners. Each reverse carries an ornamental boss (which is distinct between denominations) and patterned lines. Note specific descriptions are:

The serial numbers for all denominations consist of a prefix of the Arab letter 'C' (alif) over a number, followed by a six digit number. All serial numbers are printed in black and all numerals in the serial numbers are Arabic numerals. The serial numbers appear in the top right and bottom left of all denominations except the one riyal, where a single serial number appears in the centre of the note below the title of the issuing authority.

Specimen notes were prepared for the issue and these have several identifying features. The specific features being:

The notes issued by the Qatar and Dubai Currency Board continued to circulate in Qatar and Dubai for a number of years. When Qatar became a sovereign state on 2 September 1971 and Dubai achieved independence as a member of the United Arab Emirates on 2 December 1971, the issue and circulation of the notes continued. However, on 9 May 1973, Qatar and Dubai signed an agreement to terminate the Qatar-Dubai Currency Agreement of 1966. Under the new agreement the recently established 'Qatar Monetary Agency' took over the assets and liabilities of the Currency Board with effect from 19 May 1973.

Thus ended the short history of the Qatar and Dubai Currency Board. During its service to the states of Qatar and Dubai it had an uneventful, although extremely successful existence. A part of the process of transformation from colonial to independent government, the notes of this short-lived authority are now demanding a premium, as few notes have survived in any condition, let alone the uncirculated condition preferred by collectors. For those who do possess a piece of this history, the notes are greatly prized.

The following chart gives the number of notes in circulation for each denomination at 31 December for each year that the Qatar and Dubai Currency Board operated.

	1 QDR	5 QDR	10 QDR	25 QDR	50 QDR	100 QDR
1966	1,722,397	578,901	963,993	181,372	240,015	540,831
1967	1,984,504	606,864	1,223,372	118,956	242,599	975,911
1968	2,476,425	705,276	1,388,593	90,609	229,594	1,119,159
1969	3,057,390	733,140	1,346,170	86,207	221,571	1,182,799
1970	3,184,572	742,372	1,307,225	83,037	206,419	1,182,483
1971	3,348,727	857,804	1,490,146	85,997	198,058	1,384,576
1972	3,884,915	996,876	1,847,089	100,425	216,518	1,894,951

From this chart it can be seen that while the one, five, ten and one-hundred riyal notes proved popular and increased in circulation over the years, the use of twenty-five and fifty riyal notes decreased after the initial release.

While the distribution of these notes between Qatar and Dubai is not known, of the new currency issued in exchange for Saudi riyals in September 1966, 64% was issued in Qatar and 36% in Dubai.

	1 QDR	5 QDR	10 QDR	25 QDR	50 QDR	100 QDR
Notes Outstanding	550,038	49,203	47,199	1,565	2,406	5,855
Value Outstanding	550,038	246,015	471,990	39,125	120,300	585,500

The Bank Notes of the Qatar and Dubai Currency Board

Peter Symes