What is the 'AED (United Arab Emirates Dirham)'
The AED (United Arab Emirates Dirham) is the currency abbreviation for the United Arab Emirates dirham, the official currency of Dubai and other Emirates. It is often presented with the symbol Dhs or DH. The United Arab Emirates Dirham has been used since 1973, when it replaced several currencies, such as the Dubai riyal and the Qatar riyal.
BREAKING DOWN 'AED (United Arab Emirates Dirham)'
The United Arab Emirates dirham is made up of 100 fuloos, which is plural for fils. A fils is also the sub-unit for the Kuwaiti dinars, Iraqi dinars, Bahraini dinars and the Yemeni rial. The dirham is available in denominations of 5, 10, 20, 50, 100, 200, 500 and 1,000. The 1 dirham unit exists in coin form only.
The Central Bank of the United Arab Emirates issues the country's bank notes. To combat counterfeiting, a watermark of the national emblem appears on the obverse of each note. The emblem is the Hawk of Quraish, a golden falcon with a disk surrounded by seven stars in its center and seven feathers to represent each of the emirates.
The AED and United Arab Emirates Economy
The United Arab Emirates had a gross domestic product of about $377 billion in 2013, making it the 28th largest in the world and second among Gulf Coast Coalition nations. With the exception of Dubai, the emirates rely overwhelmingly on the exportation of oil and natural gas reserves, although they have been making steady progress toward diversification. The UAE economy has grown steadily and increased 230-fold between 1971 and 2012. Estimates place the UAE oil reserves as the seventh largest in the world.
The UAE experienced an annual inflation rate of 3.7% in 2015, a substantial increase over the 2014 rate of 2.3%. Despite concerns over inflation, investors consider the UAE dirham as among the world’s most stable currencies in terms of exchange rate stability. It has been pegged to the United States dollar at a rate of 1 U.S dollar to 3.6725 AED since 1978. The World Competitiveness Centre of the International Institute for Management Development (IMD), based in Switzerland, ranks the UAE dirham as the 24th most stable currency in the world, above the currencies of major European economic powers such as Germany, France and Italy, and Asian economic powers such as Japan, Singapore, Hong Kong and South Korea. This stability in exchange rates is important, since some estimates place the number of expatriates living and working in the UAE as high as 9 million, or roughly five times the number of Emirati citizens.
The IMD also ranks the AED as fifth in the world in terms of competitiveness, a measure of purchasing power and the ability of various sectors of the economy to import goods traded in currencies other than the U.S. dollar. This is due to the overall stability of the dollar and its strength against other currencies such as the Japanese yen and the euro, as well as to the UAE’s huge supply of crude oil reserves and foreign assets.