Prior to 1966, currencies in circulation in Qatar were those linked to the Pound Sterling, like the Indian Rupee and Gulf Rupee. When India devalued the Rupee (including the Gulf Rupee) by approximately 35%, Qatar and Dubai decided to replace the Gulf Rupee with the Saudi Riyal as an interim measure until the issuance of a new currency. On the 21st of March 1966, Qatar and Dubai signed a currency agreement to set up the Qatar-Dubai Currency Board. The new board issued the first national currency, known as the Qatar-Dubai Riyal (QDR) on September 18, 1966 at a gold par value of 0.186621 grams of pure gold—the same as the pre-devaluation rate of the Gulf Rupee. The Pound Sterling continued to provide cover for the new currency.

On December the 2nd 1971, Dubai became a part of the UAE. Therefore, it was decided to relinquish the Qatar Dubai Currency Board in accordance with Amiri Decree No. 6 of May 1973. On May 13th 1973, Law No. 7 of 1973 was issued, establishing the Qatar Monetary Agency (QMA) to assume the duties of a central bank. Further Amiri Decree—No. 24 of 1973—was issued authorizing the redemption of QDR and the issuance of a new currency known as the Qatari Riyal (QR), with the same par value against gold as the QDR.

QMA was responsible for maintaining the stability of the QR exchange rate against, and its free convertibility into, other currencies. In 1975, as per Decree No. 60 of 1975, the QR was pegged to the Special Drawing Rights (SDR) at a rate of 0.21 SDR per QR with a fluctuation margin of ± 2.25% (QR 4.7619 ± 0. 2.25% per an SDR unit). Over the period 1973-1993, QMA adopted the United States dollar (USD) as an intervention currency to fix the daily value of the QR. The QR exchange rate against the USD was to be determined on basis of the latter’s exchange rate against SDR as determined by the IMF. The QR exchange rate against other currencies was to be determined on basis of USD exchange rate against other currencies in the international financial markets. The tolerable flux margin of the QR against the SDR was increased to ± 7.25% in early 1976 due to appreciation of the USD against the SDR in late 1975. Hence, the QR exchange rate used to fluctuate against currencies other than the USD, in line with the fluctuations of the latter against those currencies.

During the second half of the seventies, QMA revalued the QR against the USD many times in order to stabilize its value against other major currencies of Qatar’s trading partners and to alleviate pressures of imported inflation. Over the period March 1976 to June 1980, the QR was revalued twelve times against the USD. On the whole, the QR was revalued against the USD by 8.5%, compensating for 13.4% depreciation in the value of the latter against the SDR. When the USD started its upward trend (in July 1980) vis-à-vis other major currencies, QMA had maintained a de facto exchange rate of QR 3.64 per a USD unaltered. The immediate impact of this link was the appreciation of the QR with the appreciation of the USD against major currencies of Qatar’s trading partners, particularly the European countries.

Established in August 1993, the Qatar Central Bank (QCB) has inherited the QMA monetary strategy of targeting the exchange rate. QCB kept adopting the policy of fixed exchange rate against the USD at the same rate of QR 3.64 per USD.