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Bahrain was under Arab control from the 700s until 1521, when Portugal seized it. In 1602, the Persians took Bahrain and held it against assaults by the Portuguese and the Omanis. In 1783 Ahmad ibn Al Khalifah ousted the Persians, and his family has ruled Bahrain ever since. In 1820, the representatives of the British government signed a general peace treaty with the Sheik of Bahrain and other important sheiks on the Pirate Coast, later renamed the Trucial Coast. A Treaty of Exclusive Relations was signed with Bahrain in March 1880 and again in March 1892. Bahrain was an independent Sheikdom and British protectorate from December 2, 1880 until it gained its independence on August 16, 1971.

The Umayyad governors of al'Bahrain struck the first coins for the region during the eighth century. Nevertheless, for the next 1000 years, most coins were either imported, or locally minted in imitation of foreign coins. Gold and silver coins, particular gold British sovereigns and silver Maria Theresa thalers, were widely used into the 1960s even after local note currencies and coins were established. Indian Rupees (INR) circulated in Bahrain until April 28, 1959, when the Persian Gulf Rupee (XPGR), issued by the Reserve Bank of India, was created for use in the Persian Gulf to reduce the drain on India's foreign reserves. The Indian Rupee was divisible into 16 Annas, and the Persian Gulf Rupee was divisible into 100 Naye Paise.

India devalued its Rupee on June 6, 1966 which affected the value of the Gulf Rupee, forcing the states using the Gulf Rupee to introduce their own currency. On October 16, 1965, the Bahraini Dinar (BHD) replaced the Persian Gulf Rupee at the rate of 1 Bahrain Dinar equal to 10 Persian Gulf Rupees. The Dinar is divisible into 1000 Fils. Banknotes were issued by the Bahrain Currency Board from 1964 until 1973, and by the Bahrain Monetary Agency from 1973 on.

Qatar, Bahrain, and the United Arab Emirates had an interchangeability agreement for bank notes starting on January 28, 1978. The rates of interchange were 10 Qatari riyals = 1 Bahrain dinar = 10 United Arab Emirates dinars, up to 5,000 Qatari riyals, 500 Bahrain dinars, or 5,000 United Arab Emirates dinars. The agreement lapsed on 5 May 1979 after Qatar revalued its currency.

Here is a coin valued at 50 Fils and dated AH1385, or 1965. This coin is a single year issue. The obverse features a Palm tree within a circle, with date below. The reverse shows the value in the center.

• Weight: 3.10g
• Diameter: 20mm
• Material: Copper-Nickel
• Edge: Reeded
• Mint: Royal Mint, London, England.
• Mintage: 6,909,000
• Krause # KM-5