Bahrain Dinar

• Country: Bahrain
• Currency: Dinar
• Alias: Bahraini dinar
• ISO 4217 CODES: BHD/048
• Symbol: BD

As the only island state in the Arab world, the Kingdom of Bahrain is a small nation, albeit one with a deep history that extends back to the third millennium BC. Bahrain’s national currency, the dinar, is pegged to the U.S. dollar at a rate of USD$1 = BD0.377, providing an element of economic stability. Bahrain is involved in the region’s oil production industry, but its crude output is minimal compared to most of its Persian Gulf neighbors. Instead, the country is better known for its refining capabilities, ship building, and aluminum smelting plants. The island has also become well known as an international banking center in the region.

Background of the Bahrain Dinar

Bahrain’s strategic position in the Persian Gulf allowed the island to become a center of trade for thousands of years. Bahrain’s current ruling family, the al-Khalifa, arrived on the island in the 1780s and have continuously inhabited the island to modern times,

Great Britain’s influence in the Persian Gulf in the early 19th century was widespread, and Bahrain had been a British protectorate for much of this time. In the early twentieth century, Bahrain had developed a reputation as a center for the international pearl trade. But the pearl market collapsed in 1930 soon after the Japanese developed methods for culturing pearls in controlled oyster beds. Fortunately for Bahrain, oil was first discovered on the island in 1932. As revenues from crude sales were rapidly realized, Bahrain benefited from improved public infrastructure in the form of education and healthcare. Bahrain formally declared its independence from Britain in 1971, by which time its oil production and refining industries were well-established.

The Bahraini dinar first debuted in 1965 under the auspices of the Bahrain Currency Board, replacing a form of currency known as the Persian Gulf rupee, which had also been used by Kuwait, Oman, Qatar and the United Arab Emirates for a short period of time before those nations also adopted their own currencies.

The Bahrain Monetary Agency (BMA) was founded in 1973 to develop and control the Kingdom’s monetary policy. Beginning in 1980, the Agency established a fixed exchange rate between the dinar and the U.S. dollar – a long-term strategy which has both fostered economic stability and promoted foreign investment. Since 2002, the BMA has also assumed responsibility for the regulation of other financial industries within the Kingdom, including capital markets and insurance.

Political unrest rocked Bahrain in 1994, when foreign-backed militants used explosive devices to attack several public buildings. This caused some of the country’s financial companies to relocate to Dubai and Abu Dhabi in an attempt to escape the civil unrest.

The Bahraini dinar is currently pegged to the U.S. Dollar at a rate of 1BHD=USD$2.65258. The dinar is a fully convertible currency, and there are currently no restrictions on its import or export. The dinar is divided into 1000 fils. Denominations for coins are 5 fils, 10 fils, 25 fils, 50 fils and 100 fils. Denominations for banknotes are 500 fils (BD 1/2), BD 1, BD 5, BD 10 and BD 20.