The United Arab Emirates (UAE) is one of the richest and most dynamic countries in the world. The stability of the economy, high oil revenues and a developed financial sector provide stability to the national currency of this state. Let's understand what kind of money is used in the UAE, how it came to be and why it is included in the list of the most stable in the world.
What is the currency in the UAE?
The official currency of the UAE is the UAE dirham (AED, ISO code 4217). It is internationally abbreviated as DH or Dhs. One dirham (AED) is equal to one hundred fils. Banknotes in denominations of 5, 10, 20, 50, 100, 200, 500 and 1000 dirhams and coins in denominations of 1 dirham and 25, 50 fils are in circulation. There are two types of banknotes in the UAE - old paper banknotes and new plastic banknotes with transparent inlays.
Interesting fact: All coins in the UAE are round, but the 50 fils is heptagonal. There are no coins smaller than 25 fils, so cash payments are rounded up to 25. However, when paying by card, the amount is debited to the nearest 1 fils.
History of the UAE currency: from rupee to dirham
Before the Dirham, there was no single currency in the region. Silver rials and the Indian rupee were used at different times. From 1766 to 1837, under the strong influence of the British state, the Indian rupee became the main currency used for payments throughout the region. However, after the devaluation of the rupee in the Persian Gulf, the region's economy suffered, trade declined and the emirates abandoned the rupee in favour of the Saudi riyal.
Interesting fact: Abu Dhabi continued to use the Bahraini dinar, while Qatar and Dubai had their own common currency, the Qatar and Dubai riyal, from 1968 to 1973.
In 1971, Dubai broke its currency board agreement with Qatar and became part of the UAE. A year and a half later, in May 1973, the Qatar and Dubai riyal was withdrawn and replaced by the Qatari riyal, and the dirham was introduced in Dubai, as in other emirates. At the same time, the emirates became members of the International Monetary Fund.
The first banknotes issued in the UAE in 1973 had a denomination of 1000 dirhams. After almost a decade, banknotes of 1 and 100 dirhams were issued, and in 1983 a 500 dirham banknote was introduced. In 1989, the 200 dirham banknote was introduced and in 2000, the 1000 dirham banknote was redesigned.
Interesting fact: The 1989 Dh200 note is extremely rare as it was a limited edition. It was redesigned in 2008 - its colour scheme changed from green and brown to yellow and brown, making it stand out more among other banknotes.
What do dirham banknotes and coins look like?
All dirham banknotes feature iconic UAE landmarks:
- 5 AED - Al Jahili Fort (Al Ain).
- 10 AED - Dhow (traditional Arabic boat)
- 20 AED - UAE Central Bank and Al Fahidi Fort (Dubai)
- 50 AED - Oryx Antelope (symbol of the Arabian nature)
- 100 AED - Sheikh Zayed (founder of the UAE) and oil platforms
- 200 AED - Sheikh Zayed Palace
- 500 AED - Falcon (symbol of power and hunting in Arab culture)
- 1000 AED - Burj Al Arab and Mosque.
The UAE coins feature various symbols of the country's culture. The 25 fils features a gazelle, the 50 fils an oil rig and the 1 dirham a teapot.
Dirham today: stability and peg to the US dollar
Since 1980, the dirham has been closely pegged to the US dollar. The official exchange rate is 1 US dollar = 3.6725 UAE dirhams. This peg ensures the stability of the currency and protects the economy from sudden fluctuations. Thanks to oil and investment, the UAE can maintain a fixed exchange rate without significant inflationary risks. For the sake of objectivity, it should be noted that the strength and stability of the UAE currency is conditional. The dirham fully reflects the purchasing power dynamics of the US dollar. Strictly speaking, it is a derivative of the American monetary unit.
Where can I change money in Dubai and the UAE?
The best places to exchange money are the bureaux de change located in shopping malls (e.g. Al Ansari Exchange, UAE Exchange, Al Fardan Exchange). Banks also offer currency exchange, but the rate may be less favourable. The rate is usually worse at airports and hotels, so it is better to exchange money in advance.
Visa, MasterCard and American Express are widely accepted in Dubai and other UAE cities. Apple Pay and Google Pay work at most retail outlets. You can withdraw cash from Emirates NBD, Abu Dhabi Commercial Bank and First Abu Dhabi Bank ATMs.
Things to know about the Dirham
Some of the most interesting facts about the UAE currency include:
- The dirham is named after the ancient Greek drachma, which was used in the Arab world during the Middle Ages.
- UAE coins have been at the centre of a scandal for counterfeiting on more than one occasion. In fact, the 1 dirham coin is exactly the same weight and size as the 1 peso coin of the Philippines. In 2006, it emerged that some payment terminals and machines were happy to accept the Philippine peso coin instead of the dirham. Considering that the Philippine peso is worth only 8 fils in UAE currency, many unscrupulous tourists made a handsome profit. Another case relates to the fact that the modern 1 dirham coin is the same size as the old 50 fils coin. This is no longer an issue, but in the past tourists were often given the old 50 fils coin instead of the new 1 dirham coin.
- The last commemorative coin in the UAE was issued in 2012 to commemorate the 50th anniversary of the first shipment of oil from the UAE. The coin is in free circulation, although it is almost impossible to see it, as it is scattered in collections.
- The dirham is the currency not only of the UAE but also of Morocco. It is also the unit of exchange for the Qatari riyal and the Libyan dinar.
- Contrary to some reports, there are no restrictions on the export and import of the UAE currency.
- In 2022, a new banknote design with improved counterfeit protection will be released. The UAE now uses plastic (polymer) banknotes, which are more durable and environmentally friendly.
- There are still old coins in circulation with the denomination in Arabic only, which sometimes causes confusion among tourists.
The UAE dirham is not only a means of payment, but also a symbol of the country's stability. Its fixed exchange rate against the dollar, economic stability and abundant natural resources make it one of the most reliable currencies in the world. If you are going to Dubai or other emirates, it is better to exchange a small amount of dirhams in advance and pay the rest by card - it is more convenient and safer. Now you know all about the UAE currency - from historical roots to modern trends!
