India, Jan. 25 -- Most Indians don't know this-but for a brief, extraordinary period, the Indian rupee was not merely a national currency. It was a regional monetary anchor, stretching from Kathmandu to Kuwait, from East Africa to Southeast Asia. Before the US dollar conquered the world, the rupee actually moved it.

To manage gold smuggling and currency arbitrage, India had issued a special offshore currency: the Gulf rupee. Identical to the Indian rupee-but printed in red, with a "Z" prefix-it powered daily trade in the UAE, Qatar, Oman, Bahrain, and Kuwait. India, by default, was a regional financial hegemon. Even East Africa-Kenya, Uganda, Tanganyika (Tanzania)-ran on rupees under the British system. This gave India's rupee the status...