UAE Dirham (AED)
The UAE Dirham is pegged to the US Dollar, providing rate stability for the Gulf region's trade and tourism hubs, including Dubai and Abu Dhabi.
Convert AED
1 AED in major currencies
| AED | All currencies |
|---|
A short history of the UAE Dirham
The United Arab Emirates introduced the dirham in 1973, shortly after the federation was formed, replacing the Qatar and Dubai riyal and the Abu Dhabi dinar. The currency's name recalls the ancient Greek drachma and is shared with several currencies in the region. The UAE later established the modern central-bank framework that supports its exchange-rate policy.
The dirham has been fixed at AED 3.6725 per US dollar since 1980s-era policy arrangements. The Central Bank of the UAE maintains the peg with reserves and domestic liquidity tools. Because the UAE earns much of its foreign income in dollars or dollar-linked energy markets, the peg gives importers, expats and global businesses predictable pricing.
What moves the AED exchange rate
The AED/USD rate itself is intentionally stable, but the dirham's wider purchasing power and financial conditions still change.
- US Federal Reserve policy: UAE rates generally follow US rates to protect the dollar peg
- Oil and gas income: energy revenue supports fiscal capacity and the country's external balance, even as the economy diversifies
- Trade, property and tourism: Dubai and Abu Dhabi attract global capital, making flows and real-estate cycles important
- Imported inflation: because many goods are imported, global prices and the dollar's strength affect local costs
The UAE Dirham in practice
The UAE is highly card-friendly in malls, hotels, taxis and restaurants, while cash is still useful at souks, small shops and for tips. ATMs are common. The dirham is the official currency; US dollars may be accepted in tourist settings, but the exchange rate is usually less favorable than paying in AED.
The UAE is a major remittance hub for workers from India, Pakistan, the Philippines, Bangladesh and elsewhere. The fixed dollar rate makes the currency leg predictable, but providers still compete on fees and destination-currency spreads. Compare the final amount received rather than only the advertised transfer fee.
Popular UAE Dirham conversions
USD/AED is effectively fixed at about 3.6725. AED/INR and AED/PKR are among the most important worker-remittance corridors, while AED/PHP and AED/BDT connect the Gulf with large expatriate communities. EUR/AED and GBP/AED are widely used for tourism and property transactions.
Frequently asked questions
Is the UAE Dirham pegged to the dollar?
Yes. The official rate is about AED 3.6725 for one US dollar, and the Central Bank of the UAE supports the peg through reserves and monetary operations.
Why do AED interest rates follow the Fed?
A fixed exchange rate is easier to defend when domestic money-market conditions broadly match those in the United States. The UAE therefore generally adjusts policy rates alongside the Federal Reserve.
Is the UAE Dirham the same as the Saudi Riyal?
No. They are separate currencies with separate pegs, although both are closely linked to the US dollar. Their exchange rate against each other is therefore usually stable but not identical.