What Is the Currency of the United Arabs Emirates?
The official currency of the United Arabs Emirates is the United Arabs Emirates dirham, also known as the Emirati dirham. It is abbreviated “AED” and represented by the symbol "Dhs" or “DH.” The AED has been in use since 1973, when it replaced the traditional currencies including the Dubai and Qatar riyal. The United Arab Emirates dirham is subdivided into 100 fils, also a sub-unit for other currencies including Kuwait dinar, Iraqi dinar, and Yemeni riyal. The dirham is available in several denominations ranging from 5 to 1,000, with 1 dirham unit existing in coin form only. The dirham has been pegged to the US dollar since 1978 at the rate of 3.6725 AED to one dollar.
History of the United Arab Emirates Dirham
The dirham was introduced in 1971 as a common currency in the UAE and replaced other currencies including the Dubai and Qatar riyal. It became the sole currency in the UAE in 1973. The Dubai and Qatar riyal had been in circulation in all the Emirates except Abu Dhabi since 1966. Abu Dhabi used the Bahraini dinar until the introduction of the dirham. The term “dirham” was derived from a Greek word “Drachmae,” literally meaning “handful.” The currency survived through the Ottoman rule due to centuries of trade and usage.
Coins and Banknotes
United Arab Emirates dirham coins were first issued in 1973 in denominations ranging from 1 to 50 fils and 1 dirham. The coins were struck in bronze and cupro-nickel. The coins bear numbers and values written in Eastern Arabic numerals and texts in Arabic. The 1, 5, and 10 fils coins are not commonly used because of their low values. Banknotes were also issued in 1973 by the UAE Currency Board in denominations ranging from 1 to 100 dirhams. In 1976, the 1000 dirham note was issued followed by a series of new notes in 1982. The 1982 series omitted the 1 and 1000 dirham notes. Text on observe side of banknotes is written in Arabic, the numbers are written in Eastern Arabic numerals, while the texts on the reverse are written in English, with numbers in Arabic.
Competitiveness of the Dirham
The UAE dirham is ranked by the International Institute for Management Development (IMD) as the one of the top 25 stable currencies in the world. It ranks above currencies of major economies, such as Germany, Italy, France, and some strong Asian economies, such as Japan and Singapore. IMD also ranks the currency as the fifth most competitive currency in terms of purchasing power and the ability of several sectors of the economy to trade goods in other currencies other than the US dollar. The competitiveness of the AED is linked to the stability of the dollar and its dominance over other currencies.
In 2017, the Central Bank of United Arabs Emirates released a new set of regulations regarding the use of digital currencies. The regulations prohibited the use of all virtual currencies and virtual currency transactions in the country. The move aimed at boosting the use of the country’s official currency and sealing leaks in the financial sector. The Central Bank of UAE is responsible for the regulation of the financial sector and the circulation of the country’s currency. Despite the rate of inflation, investors still consider the UAE’s currency as one of the stable currencies of the world.