What is the currency of the UAE?

If you’re interested in what the United Arab Emirates (UAE) currency is – i.e., the Dubai currency – the brief answer is: the UAE’s currency is the dirham, abbreviated AED (for the “Arab Emirates Dirham”). The dirham is subdivided into 100 fils (for cents/pence-like values). The dirham’s been the national currency of the country since 1973, and held in circulation throughout all seven Emirates, Abu Dhabi and Dubai. It’s a stable, popular currency with backing from the UAE’s booming economy and prudent monetary policies.

What is the currency in Dubai?

Dubai does not have its own currency – it also uses the UAE dirham, alongside the rest of the country. Dubai prices (in malls, hotels, bazaars) are always in dirhams. Large foreign currencies like the dollar (US dollars) or the Euro are technically not legal tender, though some businesses targeting tourists can accept them in some instances (customarily at an unfavourable exchange rate). You should plan to exchange your alternative currency into dirhams for spending in Dubai and the other Emirates prior to travel.

History of the UAE dirham

The UAE dirham was established in 1973, in place of multiple currencies that were previously used (e.g., the Qatar and Dubai riyal in the majority of the UAE, and the Bahraini dinar in Abu Dhabi). A single national currency was the driving force behind the launch of a new economy. The dirham has been in existence for more than 50 years; in 2023 the UAE marked the dirham’s 50th year in usage as its own currency. Its issuance and monetary supply regulation are managed by the Central Bank of the UAE. UAE banknotes are now available in denominations ranging from AED 5 up to AED 1,000 (these carry symbols such as the falcon and Arabian oryx), and coins at the value of 1 dirham, 50 fils, and 25 fils (smaller fils coins also exist but are relatively uncommon).

Pegged to the US dollar

A defining feature of the dirham is that it is pegged to the US dollar at a fixed exchange rate. Since 1997, 1 US dollar has equaled 3.6725 AED – a rate fixed by the UAE’s Central Bank. In practice, this means the dirham’s value against the US dollar does not fluctuate; it remains constant day after day. The peg was adopted to stabilise the young currency, especially since the UAE’s key export (oil) is priced in dollars. By anchoring the AED to the USD, the country reduces exchange-rate risk and fosters investor confidence. Thanks to this policy, the dirham is considered one of the world’s most stable currencies in terms of exchange rate stability. However, the AED will still fluctuate in value relative to other currencies (like the euro or British pound) in line with the dollar’s movements. If the US dollar strengthens on global markets, the AED likewise strengthens against other currencies by the same proportion – and vice versa when the dollar weakens.

Exchange rates and 2025 trends

Throughout 2025, the UAE dirham (AED) has obviously stayed extremely stable against the U.S. dollar, as it is pegged at around AED 3.67 per $1, The AED’s value against other major currencies has simply moved with the dollar’s strength. For example, one British pound has been about AED 4.9, and one euro roughly AED 4.3 in 2025. These rates have only changed slightly over the year, reflecting minor global currency shifts – overall the dirham’s exchange rates in 2025 have remained steady and consumer-friendly.

Generally speaking, the dollar peg gives predictability – businesses and travellers can be aware that the dirham will remain stable against the US dollar, and will only fluctuate against other currencies to the same degree that the dollar does.

Economic strength behind the AED

The UAE currency’s stability is supported by the economic strength of the nation. The UAE has one of the largest economies in the Middle East region with a GDP of around USD 500 billion in 2023. It experiences low inflation in general, and has built large buffers in its reserves. Moreover, the foreign currency reserves at the Central Bank were about USD 232 billion in 2024, up sharply from the previous year. Such large reserves assist the UAE in defending the peg of the dirham and the credibility of the currency. Thanks to prudent fiscal policies and a diversified economy, foreign investors are confident that the AED has the ability to hold its value in the long run.

Future outlook for the UAE dirham

Looking ahead, the UAE dirham is expected to remain stable and firmly pegged to the US dollar. UAE officials have consistently affirmed their commitment to the dollar peg, which has served the economy well for decades. Unless a major global shift prompts a policy change, the 1 USD = 3.6725 AED rate is likely to remain in place.

The UAE is also embracing innovation to keep its currency future-ready. In 2025, the Central Bank of the UAE announced plans for a “Digital Dirham” – a central bank digital currency – to keep pace with evolving financial technology (CBUAE, 2025). A digital AED could make transactions even more efficient and further strengthen the currency’s role in a cashless future.

In summary, the currency of the United Arab Emirates is the UAE dirham (AED) – a reliable, stable currency that is used in Dubai and all other Emirates. With its long-standing dollar peg and strong economic fundamentals, the AED offers a high degree of stability and predictability for businesses, investors, and travelers. Whether you’re visiting Dubai’s gold souks or managing a company’s international transfers, you can count on the value of the Emirati dirham. For practical guidance on currency exchange and money transfers involving the UAE, see CurrencyTransfer’s guide to managing international payments from Dubai. The UAE’s monetary outlook remains positive, with the dirham continuing to underpin the nation’s economic prosperity.

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