The currency of the United Arab Emirates is the United Arab Emirates Dirham or, for shorter, the UAE Dirham. Its official currency code according to ISO 4217 is AED. The abbreviations DH or Dhs are also used unofficially.
A UAE dirham is divided into 100 fils. Within the federation, which consists of seven emirates, this currency is used uniformly.
The exchange rate to the US dollar was fixed by the state at the end of the 1980’s and is 3.6725 dirhams per US dollar. As a result, there are no exchange rate fluctuations between the currency pair.
However, the UAE dirham tends to be undervalued due to the peg. There are currently considerations to give up the peg to the US dollar and instead set up a fixed exchange rate to the euro.
There are currently five coins in circulation with a value of 1 dirham as well as 5, 10, 25 and 50 fils. The 5 and 10 Fils coins play practically no role in everyday payments.
It is usually rounded up or down. The numbers on the coins are minted in Indian numbers, while the script is Arabic. There are also eight banknotes for 5, 10, 20, 50, 100, 200, 500 and 1000 dirhams.
The writing on the front of the notes is in Arabic, the numbers are again Indian. On the back there is English writing with European numbers.
There are repeated discussions about the introduction of a common currency for all Gulf states. The countries of Qatar, Bahrain, Oman, Saudi Arabia, the United Arab Emirates and Kuwait are involved in the negotiations with their central banks.
Due to the economic strength of the nations, any common currency area created in the Gulf is of great importance.
History of the currency
The name of the currency is derived from the Greek word drachma. Classically it was a silver coin. For centuries the dirham and the fils have been the main currency units in the Islamic world.
The UAE dirham was introduced in 1971. Before that there were two different currencies in the Emirates. In the emirate of Abu Dhabi the Bahraini dinar was used to pay, in all other emirates there was the Qatari riyal.
In the years before 1966, the United Arab Emirates already had a common currency, the Gulf rupee.
In 1978 the dirham was linked to the international special drawing law.