Exchange rates are always in a state of change, something that has only been exacerbated by the global energy crisis. Given the current focus on the global economy, it’s interesting to take a look at the history of Middle Eastern countries whose economies are built largely on the exporting and trading of oil.
In this blog, we look at the histories of currencies and exchange rates in the UAE, Saudi Arabia, Oman, Kuwait, Bahrain and Qatar. All of these nations, at some time or another, have ‘pegged’ their currencies to that of a foreign nation to support their own economy, largely because of their oil supply. Read on to find out more about the history of money in the Middle East and Middle Eastern currency exchange.
UAE and Dubai Exchange Rate
The Emirati Dirham first came into circulation in 1973. The Emirati Dirham replaced the Qatar and Dubai riyal, which was used across the UAE from 1966 onwards, with the exception of the capital Abu Dhabi, which had used the Bahraini dinar.
Prior to this, before 1966, all the emirates that formed the UAE had used the Gulf rupee as currency. The Gulf rupee was pegged at parity to the Indian rupee. But in 1966, when India devalued the Gulf rupee against the Indian rupee, the Emirates adopted alternative currencies. During the transition from the Gulf rupee to the Qatar and Dubai riyal, the trucial states of the Emirates briefly adopted the Saudi riyal.
The Emirati dirham, or the United Arab Emirates dirham, is typically abbreviated to ‘AED’. Its name derives from the ancient Greek word ‘drachmae’, meaning ‘handful’. The UAE and Dubai exchange rate today sees 1 GBP (Great British pound) equate to 0.22 AED.
Saudi Arabia Exchange Rate
When the kingdoms of Hejaz and Najd were united by royal decree in 1932, the kingdom of Saudi Arabia was formed. The Saudi riyal has been the currency used in Saudi Arabia since its very beginnings.
The Saudi riyal exists at a fixed rate to the US dollar, like many other Middle Eastern nations, and has been fixed seen 1986.
1 Saudi riyal today is worth roughly 0.21 GBP.
Oman Exchange Rate
Prior to 1970, when Oman adopted the rial Saidi, Oman had no national currency. The area, which was known as Muscat and Oman at the time, used both the Indian rupee and the Maria Theresa thalera across different regions.
In 1970, the rial Saidi was adopted, which had a value equal to the Great British pound at the time. In 1973, the name of the currency was officially changed to the rial Omani, or Omani rial (OMR), which is still used in the country today.
As is typically the case in Middle Eastern countries, the Omani Rial is pegged to the US dollar, given its dependence on oil exports. The country has seen a number of significant periods of inflation, and it is predicted that, until Oman diversifies its economy, the Omani Rial will remain pegged to the dollar.
Today, 1 Omani rial is worth 2.07 pounds sterling.
Kuwait Exchange Rate
The Kuwaiti Dinar was introduced as Kuwait’s national currency in 1961, replacing the Gulf rupee. At the time of its introduction, it was equivalent to the Great British pound.
Between 1990 and 1991, following Iraq’s invasion of Kuwait, the Iraqi dinar replaced the Kuwaiti dinar. Today, the Kuwaiti dinar is pegged to a number of currencies as opposed to just one; while this basket of currencies isn’t disclosed by Kuwait, it is expected to be weighted largely toward the US dollar.
Demand for the Kuwaiti dinar, or KWD, is generally very high – not only is its economy dependent on oil exports, but it also uses its oil revenue incredibly efficiently.
Today, 1 Kuwaiti dinar is worth 2.60 pounds sterling.
Bahrain Exchange Rate
The Bahraini dinar was introduced as the national currency of Bahrain in 1965, replacing the previously used Gulf rupee. At the time of its introduction, 1 Bahraini dinar was worth ¾ of 1 pound sterling, or 15 shillings.
In 1980, the Bahraini dinar was pegged to the US dollar by account of the IMF’s special drawing rates. It was pegged at a rate of 0.376 dinar to 1 USD. In Bahrain, the Saudi riyal is also accepted as legal tender, with the exclusion of the 500 riyal note.
The Bahraini dinar, abbreviated to BHD, is currently worth 2.11 pounds sterling.
Qatar Exchange Rate
The Qatari rial was first introduced as a national currency in 1973. It came to prominence after many years of the Gulf rupee, as well as the Qatar and Dubai riyal, interspersed with a brief period of time where the Saudi riyal was used in the nation.
Qatar, like Oman, is attempting to diversify its economy by introducing various new developments and incentives. This has been done in the hopes of attracting international private investments and entrepreneurs. For example, Qatar’s working population doesn’t pay income tax.
The various tax and capital incentives available in Qatar make it an attractive location for expats. You can find out more by reading our guide on moving to Qatar, and you can also read our blog on healthcare in Qatar and the rest of the Middle East.
Today, 1 Qatari rial, usually abbreviated to QAR, is worth 0.22 pounds sterling.