The Persian Gulf Rupee or the Gulf Rupee was a currency issued by the Government of India and the Reserve Bank of India for use in the Persian Gulf and the Arabic peninsula. The Indian rupee was an official currency in several areas that were controlled by the British and governed from India and it was a legal tender in the Gulf countries up till 1966.

In mid-20th century,  smuggling of gold picked up in India due to the excessive external use of rupee. While the smuggling problem lasted for many years it reached to alarming proportions in 1957-58. India was paying for the illegal importation of gold through its foreign reserves. To reduce the strain on India’s foreign reserves and to turn the balance of trade in India’s favour, a separate currency was created. This new rupee note was called as Gulf Rupee and was issued by the Government of India (INR 1) and the Reserve Bank of India (INR 5, 10, 100) only to be used as a legal tender outside the country.

These new rupee notes were introduced by a bill passed in both the Houses of the Indian Parliament and with the Presidential assent on May 1, 1959 and were called as the “External Rupee” or the “Gulf Rupee”. This issue of the ‘special notes’ was not a legal tender in India and was exclusively for use in the Persian Gulf.

The Gulf rupee notes retained the contemporary design but were different in colour and carried the prefix “Z”. The notes were issued one, five, ten and hundred denominations and were redeemable only at the Bombay office of issue.

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