مجموعة ٣٠/ ٢٢٤ "ترتيبات العملة في المشيخات العربية في الخليج الفارسي." [و‎‎٣] (١٥٧/١٢)

I
Tims *
I have not had time to consider this at all
deeply but it looks to me as if v/e might have got
into trouble.
2. There are papers in the Registry which you sho Id
get out about a circular sent by the Pakistan
Government to diplomatic posts in the Middle fast,
Persian Gulf and Afghanistan saying that attempts
were being made by Hindu merchants to injure the
trade of Pakistan by crying down the value of the
Pakistan rupee. The Foreign Office enquired from
various posts what reply had been sent about this
and there was, I think; an answer from Bahrain.
Mow we have (External 71S5) an article in "Dawn 11
saying that "our good friends in Whitehall" (which
means you and me and Norman Young) "have been helping
the Hindus in their machinations against Pakistan
currency in the Persian Gulf". This complaint is
now supported by the Pakistan Government officially.
It is true that the High Commissioner does not seem
much alarmed about this but I think we ought to
consider whether we did not perhaps go wrong in
agreeing with the Treasury proposal to allow the
Resident in the Persian Gulf to issue instructions
that British Offices, including Post Offices, in the
Gulf should deal only in Indian currency (No*3 on
B(B) 12809/48)• Those papers do not seem to be
complete because we have not got the Political
Resident’s arguments against accepting the Pakistan
rupee equally with the Indian rupee.
3. I suppose that the arguments are:-
(a) That it is difficult to operate on two
currencies even if the denominations are
the same, and
(b) That as commercial banks charge a discount
when they take Pakistan rupees, there
would be a loss to British Of ices and
Post*Offices by doing so.
4. But as I understand it, the Pakistan rupee and
the Indian rupee, by agreement between the new
Pakistan Bank and the R.B.I. are exchangeable at par.
Since the number of Pakistan and Indian traders in the
Gulf is thought to he about equal, it does seem
desirable that the Trkirtan rupee should be accepted
there as readily as the Indian and that at any rate
United Kingdom authorities should not tase the lead
or set an example in making the Pakistan rupee a less
acceptable currency.
5. Assuming that I am right that there is a parity
arrangement between India and Pakistan, I should have
thought there was a case for trying to get the local
banks in the Gulf to accept the Pakistan rupee as
readily as the Indian one and without charging discount
This, however, is a highly technical banking matter.
lily impression as at present advised therefore is that
we had better go back to the Treasury and ask them to
reconsider this in consultation with the Bank of
England and see whether anything can be done to remove
the Pakistan grievance. At any rate we ought to try
and get an arrangement whereby British controlled
Post/