Historical Sketch

In the 1820s, seven sheikdoms at the Arabian Gulf (Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, Umm al-Quwain) concluded a maritime agreement with Great Britain. In 1892, they subordinated themselves to the British protectorate of the so-called Trucial States in the Gulf. In 1971, they attained independence as the federal monarchy of the United Arab Emirates. Each member state has its own monarch, Abu Dhabi as the largest member hold the presidency.

Monetary History Overview

During the British protectorate, the Indian currency entered the region via foreign trade, and the Indian Rupee also remained current after Indian independence. In 1959, the Indian Central Bank decided to issue separate banknotes for the states on the Persian Gulf in order to have better control over the money supply. This created a special form of the Indian currency, the so-called Gulf Rupee. When India devalued the Rupee in June 1966, the Arab countries using the Gulf Rupee all decided not to follow. The Emirate of Abu Dhabi immediately adopted the Bahraini Dinar that had been created the year before. The Emirate of Dubai and neighbouring Qatar had already agreed in March 1966 to create a common currency. As the time of the Rupee devaluation the preparations were not advanced enough for its immediate introduction, both countries therefore switched to the Saudi Arabian Riyal as an interim in order to be able to quickly abolish the Gulf Rupee. In September 1966, the Qatar-Dubai Riyal was introduced, and five other Trucial States (Ajman, Fujairah, Ras Al Khaimah, Sharjah, Umm Al Quwain) also adopted the currency, while Abu Dhabi remained with the Bahraini Dinar. Upon independence of the United Arab Emirates in 1971 as the adoption of a distinct currency was initiated. In May 1973, the currency board was constituted, and the United Arab Emirates Dirham got created as national currency. In 1980, the newly established central bank took over from the currency board. Initially pegged to the US Dollar, the Dirham switched to the IMF Special Drawing Rights (SDR) unit in 1978. The peg to the US Dollar was restored already in 1980 and, with a minute adjustment in 1997, has been in place since then.

The United Arab Emirates joined the International Monetary Fund (IMF) on 22.09.1972.

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