AED (United Arab Emirates Dirham)

What Is the AED (United Arab Emirates Dirham)?

The AED is the currency truncation for the United Arab Emirates dirham, the official currency of Dubai and different Emirates. It is frequently given the symbol Dhs or DH. The United Arab Emirates Dirham has been utilized beginning around 1973, when it supplanted several currencies, like the Dubai riyal and the Qatar riyal.

Essentials of AED (United Arab Emirates Dirham)

The United Arab Emirates dirham is comprised of 100 fils. The dirham is accessible in groups of 5, 10, 20, 50, 100, 200, 500, and 1,000. Coin groups are 1, 25, and 50 fils, in spite of the fact that it's fascinating to note that coins with a value of under 10 are rarely utilized.

The Central Bank of the United Arab Emirates issues the nation's banknotes. To combat duplicating, several watermarks are utilized, including the national insignia showing up on the front-side of each note. Any action "considered an affront" to the national image is viewed as a culpable crime and that incorporates duplicating. The symbol is a golden bird of prey with a plate encompassed by seven stars in its center and seven quills to address every one of the Emirates.

The AED and United Arab Emirates Economy

The United Arab Emirates had a gross domestic product of about $421 billion out of 2019, positioning 25th on the World Economic Forum's Global Competitiveness Index. With the exception of Dubai, the emirates depend predominantly on oil exports and natural gas reserves, in spite of the fact that they have been gaining consistent headway toward diversification.

Investors believe the UAE dirham to be among the world's most stable currencies in terms of exchange rate stability. It has been pegged to the United States dollar beginning around 1997 at a rate of 1 U.S dollar to 3.6725 AED.

Why Peg to the USD?

Due to the country's dependence on the oil industry, officials see it invaluable to peg its currency to the U.S. dollar. Recollect oil prices are named in U.S. dollars. By pegging its currency against the greenback, the UAE government can reduce the volatility of its exports. The country's economic indicators and current account ought to be kept up with at optimal levels to keep up with the peg. For instance, as of this composition, the UAE government is running a current account surplus to its GDP.

In any case, the peg can likewise neutralize government strategy. For instance, oil prices fell in 2015 and reduced revenues for GCC countries. Numerous countries played with cheapening their currency against the U.S. dollar. The devaluation would help neighborhood revenue in light of the fact that U.S. dollars collected from oil sales could be localized for additional dirhams.

Features

• It is sub-separated into 100 fils.
• It is pegged to the U.S. dollar and is among the world's most stable currencies.
• The UAE Dirham is the currency of the United Arab Emirates.