DIRHAM’S AR­RIVAL GREETED BY FEW BIRTH PAINS

Until the mo­ment it be­came le­gal ten­der, there was a con­fus­ing jum­ble of cur­ren­cies, writes James Lang­ton

The National - News - - NEWS -

It was the sec­ond week of May 1973 and, un­der con­di­tions of ab­so­lute se­crecy, a heav­ily guarded con­voy of lor­ries wound out of Dubai In­ter­na­tional Air­port.

Driv­ing steadily west, the con­voy picked up speed as it reached the empty desert of Jumeirah and crossed the border to be­come among the first ve­hi­cles to use the new sin­gle car­riage­way that con­nected Dubai and Abu Dhabi.

Sev­eral hours later, the fi­nal des­ti­na­tion was reached: the Na­tional Bank of Abu Dhabi. Printed in Lon­don, then flown more than 4,800 kilo­me­tres to a coun­try not yet two years old, here, in tightly packed bricks of pa­per, was the wealth of a na­tion. Or at least its ban­knotes. It is 45 years since the UAE dirham made its de­but and the now-fa­mil­iar coins and notes be­came the of­fi­cial cur­rency.

The news of the new cur­rency had been made pub­lic only a week be­fore it be­came le­gal ten­der on May 19, 1973. It was re­vealed on the May 12 front page of Abu Dhabi News, the English-lan­guage news­pa­per of the time, with the head­line “New Cur­rency for the UAE” and re­port­ing: “The United Arab Emi­rates will have its own cur­rency re­plac­ing the ex­ist­ing cur­rency of Bahraini di­nar and Qatar-Dubai real.”

A fuller ac­count ap­peard a week later in the Gulf Mir­ror: “The UAE cur­rency arrived last week in Dubai on char­tered planes in great se­crecy.

“All banks in the UAE were closed yes­ter­day through to Thurs­day while the Na­tional Bank will send the banks, all over the UAE, the nec­es­sary amounts of new cur­rency for their cur­rent cir­cu­la­tion,” the news­pa­per re­ported. It claimed that the de­sign of the dirham had not been with­out con­tro­versy: “There was a dis­pute over print­ing some verses from the holy Qu­ran on the new cur­rency.

“It was ar­gued in some cir­cles that since the cur­rency would cir­cu­late among non-be­liev­ers, it was there­fore against the prin­ci­ples of Is­lam to have such verses printed.”

Most peo­ple, how­ever, were sim­ply glad to see the back of a con­fus­ing jum­ble of cur­ren­cies that had ex­isted pre­vi­ously, in some cases for more than a cen­tury. A coun­try that had come to­gether on De­cem­ber 2, 1971, now had money it could call its own.

Mo­han Jashan­mal, whose fam­ily name is fa­mil­iar on stores across the Ara­bian Gulf, re­calls that Abu Dhabi was en­joy­ing spec­tac­u­lar growth by the early 1970s, the re­sult of ex­panded oil pro­duc­tion and rising en­ergy rev­enues.

“Ev­ery­thing was turned up­side down. The Cor­niche was be­ing built and there were new roads ev­ery­where.”

It cre­ated a prob­lem. “At that time we had to have ship­ments to get money into the coun­try.”

In the case of Abu Dhabi, the money be­ing brought in was the Bahraini di­nar, adopted in 1965.

For Dubai, the of­fi­cial cur­rency was the riyal, the re­sult of the Qatar-Dubai Cur­rency Agree­ment of March 21, 1966.

Be­fore that, the cur­rency sit­u­a­tion was even more com­plex. From the 19th cen­tury, many traders turned to the Maria Theresa thaler, from which the name dol­lar is de­rived.

Minted from silver and bear­ing the head of the Aus­trian empress, the coin car­ried only the date of her death in 1780.

So pop­u­lar was this uni­ver­sal cur­rency that ver­sions were minted all over the world. The Birm­ing­ham Mint in Eng­land was still strik­ing silver thalers for use in the Mid­dle East as late as 1955.

In 1945, a Bri­tish of­fi­cial in the Gulf noted in his an­nual re­port to su­pe­ri­ors that: “The Maria Theresa thaler, the lo­cal cur­rency, ap­pre­ci­ated steadily dur­ing the year … prices of lo­cal prod­uct have all to be paid for in this cur­rency and the poor, es­pe­cially those on low ru­pee salaries, have ac­cord­ingly suf­fered.”

A so­lu­tion was the wide­spread adop­tion of the In­dian ru­pee but its pop­u­lar­ity put an in­creas­ing strain on In­dia’s cur­rency re­serves and, in 1959, the Gulf ru­pee was in­tro­duced, printed in red and pegged to the Bri­tish pound at the rate of 13.5 ru­pees to £1.

There was an­other seis­mic change in 1966. In­dia’s in­creas­ingly per­ilous fi­nances led to the gov­ern­ment of Indira Ghandi de­valu­ing the ru­pee by a stag­ger­ing 57 per cent on July 6. The Gulf ru­pee was not spared. Any­one hold­ing the cur­rency was in­stantly poorer. The cur­ren­cies of Bahrain and Qatar pro­vided a tem­po­rary fix.

Even af­ter the cre­ation of the UAE, the picture was still con­fused. Ad­ver­tise­ments in the news­pa­pers, in­clud­ing those for gov­ern­ment con­tracts, could be in any of three cur­ren­cies, in­clud­ing the ru­pee.

A sin­gle cur­rency was es­sen­tial if the new gov­ern­ment was to re­tain mone­tary con­trol. And so the dirham was cre­ated, an an­cient name known from the early days of the Byzan­tine Em­pire and drawn from the Greek for “hand­ful”.

Dirham ban­knotes were printed in six de­nom­i­na­tions, from Dh1,000 to Dh1, and en­graved with lo­cal scenes with their value in Ara­bic and English.

The Dh1,000 note showed the Jahili Fort in Al Ain and the minaret of the Great Mosque in Dubai; while the Dh1 note was il­lus­trated with the fort at Shar­jah, then the po­lice sta­tion, and the old clock tower. All car­ried the fal­con wa­ter­mark.

Coins were also minted, from Dh1, larger than the one in use to­day, down to a sin­gle fil, in bronze and fea­tur­ing a stand of palm trees. The coin is still tech­ni­cally in cir­cu­la­tion, like its equally elu­sive big­ger broth­ers, the five and 10 fils.

Mr Jashan­mal re­calls that the dirham arrived with­out any birth pains. Cur­ren­cies in the re­gion were val­ued against the US dol­lar, he says, which made con­ver­sion easy. “We never had any real prob­lems.”

In Au­gust 1973, the Cur­rency Board took out news­pa­per ad­ver­tis­ing to warn that the Qatar-Dubai riyal would cease to be le­gal ten­der by mid-Septem­ber. In Novem­ber, the Bahraini di­nar fol­lowed suit. The mighty dirham now ruled over the UAE.

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