A Brief History of the UAE Dirham

A currency’s exchange rate and valuation are integral to its power, influence, and purchasing power. The UAE has grown globally in recent years due to its currency rate. It has become one of the world’s richest countries due to its ever-stable currency value and ties with other global currency superpowers, such as the US Dollars.

Read ahead to learn more about the storied history of the UAE currency and the global trends its currency rates have experienced.

What Is a Currency Exchange Rate?

Because each region has a different currency, its value will differ compared to other currencies worldwide. Thus, an exchange rate is a value or rate at which one currency is exchanged for another.

Timeline of the UAE Dirham

The history of the UAE Dirham also denoted as AED, is almost as long as the country’s inception, spanning 50 years. It all started two years after the unification of all regions under the UAE, when, in 1973, the UAE adopted the Dirham as its official currency.

Before the Dirham, however, the cities used Qatar and Dubai riyal, except Abu Dhabi, which used the Bahraini Dinar. The UAE, then, chose to use the currency throughout its region. Since November 1997, the UAE Dirham has been attached to the US Dollar, using which all conversions and exchange rates are set.

Strength of the Dirham

Since the UAE Dirham has been tied to the US Dollar for years, it gives the relative stability, power, and influence of the US Dollar. The Dirham is one of the most stable currencies in the world and is considered a stable and reliable Forex trading option.

The UAE Government pegged the Dirham to the US Dollar at a specific rate since 1997. Any changes in the currency rate in UAE coincide with the changes in the US Dollar.

Historical Trends of the Dirham

The devaluation or revaluation of the currency depends on the dollar’s exchange rate since the UAE Dirham is pegged to the US Dollar.

It means that the Dirham has followed the same trends as the US Dollar. While the currency is usually at a stable 3.6725 AED to the Dollar, the highest valuation of the Dirham has been 3.68 AED, with the lowest being 3.66 AED.

Dirham Currency Rate Being Pegged to the US Dollar

With the Dirham being pegged to the US Dollar for almost 30 years, there are many benefits of keeping on doing so. Firstly, this greatly helps to trade, as the pegged rate can keep the country’s exchange rate low, and when exporting or importing from the US, the value of each product will be precise.

Wrapping Up

Additionally, the fixed currency rate in UAE provides currency protection to the country, as they can protect their domestic economies from the volatile nature of the global market.

In conclusion, the UAE Dirham has a fabled history, and in recent years, it has been one of the most stable currencies in the world as a direct result of pegging the currency with the US Dollar.