1 Dirham (National Bank of Dubai) – United Arab Emirates

In 1998, the currency situation in the United Arab Emirates was defined by a long-standing and unwavering peg of the UAE dirham (AED) to the US dollar. This fixed exchange rate regime, established in the late 1970s and formally pegged at AED 3.6725 per USD 1 since 1997, provided crucial stability for the oil-dependent economy. The peg anchored monetary policy, minimized exchange rate risk for foreign investors, and facilitated predictable pricing for the UAE's primary export: hydrocarbons. This was particularly significant in 1998, as the global economy was reeling from the Asian Financial Crisis, which had caused severe currency volatility across emerging markets.

The year 1998 presented a specific test for this peg due to a sharp decline in oil prices, which fell to around $10 per barrel—a stark drop that significantly pressured government revenues. Historically, such a shock would have strained a currency peg, potentially leading to devaluation discussions. However, the UAE's substantial financial reserves, accumulated during periods of higher oil prices, provided a robust buffer. The Central Bank of the UAE maintained the peg without deviation, using its reserves to defend the currency's value and demonstrating a deep institutional commitment to the dollar link. This action reinforced investor confidence during a period of regional economic uncertainty.

Consequently, the dominant narrative of 1998 was not one of currency crisis but of successful stability maintenance. The fixed peg proved its value as a stabilizing mechanism, insulating the domestic economy from the worst of the era's financial turbulence. This experience further cemented the policy consensus within the UAE that the dollar peg was essential for economic planning and integration into global trade, setting a course that would remain unchallenged for decades and support the nation's rapid diversification and growth in the following years.