5 Dirhams – Qatar and Dubai

In 1966, both Qatar and Dubai, along with the other Trucial States, were part of the Gulf Rupee monetary system. This currency was issued by the Government of India and the Reserve Bank of India, serving as the legal tender for the region's external trade and pearling economy. However, the system faced a severe crisis that year when India devalued its own domestic rupee by approximately 36% but did not extend this devaluation to the Gulf Rupee. This created a massive arbitrage opportunity, where Gulf Rupees could be bought cheaply in the Gulf and exchanged for more valuable silver or other currencies elsewhere, leading to a rapid and destabilizing flight of currency from the region.

The immediate response was decisive but divergent. Qatar, in close consultation with the British political agency, moved swiftly to introduce its own independent currency. On March 21, 1966, the Qatar-Dubai Riyal was established, with both states agreeing to a currency union. However, this partnership was short-lived. Dubai, influenced by its deeper commercial ties with neighboring emirates and a desire for a broader economic union, soon withdrew. Consequently, Qatar introduced the Qatari Riyal as its sole currency in 1966, pegging it to sterling at a rate of 13.33 rupees to the pound.

Dubai, alongside the other Trucial States (except for Qatar and Bahrain), pursued a different path. After the collapse of the Gulf Rupee, they initially used the Saudi Riyal for a transitional period. By 1966, plans were solidified for a new, shared currency. This led to the creation of the Qatar-Dubai Riyal for a brief period, but following Qatar's exit, the remaining states formally established the Dubai Riyal (which was effectively the same as the Abu Dhabi Riyal). This currency would later form the foundation for the unified UAE Dirham upon the federation's formation in 1973. Thus, 1966 was a pivotal year of monetary divorce, setting Qatar and Dubai on separate currency paths that reflected their emerging national identities and strategic economic choices.