Explainer

Why is the UAE dirham pegged to the US dollar?

The UAE dirham is pegged to the US dollar at 3.6725 AED per USD, so unlike a floating currency it stays within a very narrow range.

What a peg means, in plain terms

A "peg" means a country fixes its currency to another currency at a set rate instead of letting the market move it freely. The US dollar floats — its value against the euro or the rupee changes minute to minute. The dirham does not. The Central Bank of the UAE (CBUAE) commits to a fixed rate against the dollar and stands ready to buy or sell dirhams to keep it there, so the AED/USD rate holds almost perfectly steady day after day.

Why the UAE uses one

The CBUAE describes the peg as the anchor of its monetary policy. Fixing the dirham to the dollar gives the UAE a stable, predictable exchange rate, which supports trade and financial confidence and supports price stability. Because so much of the UAE's trade, investment, and reserves are denominated in dollars, tying the dirham to the dollar removes exchange-rate risk from a large share of the economy. The trade-off is that the CBUAE generally moves its policy rate in step with the US Federal Reserve — the cost of keeping the rate fixed.

Since when

The dirham has been pegged to the US dollar at 3.6725 since November 1997, according to the Central Bank of the UAE — nearly three decades of a fixed dollar peg. The IMF notes that the dirham was already effectively pegged to the US dollar before 2002, while the formal de jure dollar peg dates from February 2002.

What it means for you

Day to day, AED/USD is stable — 1 dollar buys about 3.6725 dirhams, and that barely moves. Because the dirham is pegged to the dollar, the rates you see for AED/INR, AED/PKR, AED/PHP, AED/EUR, and AED/GBP largely reflect how those currencies move against the US dollar. So if the Indian rupee weakens against the dollar, AED/INR moves with it. The dirham side of the pair is the steady anchor; the other currency is what's actually changing.

Why your bank or exchange-house rate differs

The Google/mid-market rate is the market benchmark — the midpoint of what the currency is trading at globally. Because AED is pegged to USD, cross-rates such as AED/INR are derived from the dollar relationship. A bank or exchange house may give you a different effective rate because of its spread and any explicit fees. If your bank or exchange house gives you a different rate, that difference is usually the provider's spread or fee, so it's worth comparing against the Google/mid-market rate before you send money.

Common questions

Will the dirham ever be revalued?

The CBUAE has kept the peg fixed at 3.6725 since 1997 and treats it as the anchor of its monetary policy. A change would be a deliberate central-bank policy decision, not a market move. There is no indication of one, and the peg has held for nearly three decades.

Is the dirham stronger than the rupee?

Not in the way the numbers suggest. A higher exchange rate — one dirham buying many rupees — does not by itself mean one currency or economy is "stronger" than another. The number mainly reflects the unit each currency is counted in, not the health of its economy. Comparing "strength" by the raw exchange-rate number is misleading. (A full explainer on this is planned.)

Why does the rate on my bank statement differ from 3.67?

3.6725 is the fixed AED/USD peg. Your statement shows the rate your bank or exchange house actually applied, which includes their spread and any fees. If the transaction wasn't in dollars, it's also a different currency pair. To see the gap, compare it against the Google/mid-market rate for that pair.

See the rates for yourself

• The converter — check any amount at the live mid-market rate.
• AED to INR
• AED to PKR
• AED to PHP
• AED to EUR
• AED to GBP

Sources

Every factual claim on this page is drawn from a primary source:

• Current peg (3.6725) and how it is maintained — Central Bank of the UAE, Domestic Market Operations and its press release on the fixed peg remaining in place.
• The peg dating from 1997 — Central Bank of the UAE, Annual Report 2023.
• The de facto (pre-2002) versus de jure (February 2002) distinction, and the 3.6725 midpoint in place since November 1997 — IMF Country Report No. 09/124 (UAE 2008 Article IV, §IX Exchange Rate Arrangement).
• The peg as a credible anchor for monetary policy — IMF, United Arab Emirates 2025 Article IV Consultation.

Have a correction? [email protected].

Last reviewed: 29 August 2026.