1 Dirham (National Bank of Abu Dhabi) – United Arab Emirates
Circulating commemorative coins
Commemoration: The 40th Anniversary of the National Bank of Abu Dhabi
United Arab Emirates
Context
Year: 2008
Issuer: United Arab Emirates 
Ruler: Khalifa bin Zayed Al Nahyan
Currency:
(since 1973)
Total mintage: 250,000
Material
Diameter: 23.8 mm
Weight: 6.4 g
Thickness: 1.9 mm
Shape: Round
Composition: Copper-nickel
Technique: Milled
Alignment: Medal alignment
flip
References
KM: #Click to copy to clipboard85
Numista: #19867
Value
Exchange value: 1 AED
Obverse
Reverse
Edge
Reeded
Mintings
| Year | Mint Mark | Mintage | Quality | Collection |
|---|---|---|---|---|
| 2008 | — | 250,000 |
Historical background
In 2008, the United Arab Emirates faced a significant monetary policy challenge centered on its currency peg. Since 1997, the UAE dirham had been formally pegged to the US dollar at a fixed rate of approximately AED 3.67 per dollar. This policy provided stability and was a cornerstone for the UAE's rapid economic growth, particularly in Dubai and Abu Dhabi, by anchoring inflation expectations and facilitating trade and investment inflows. However, the peg also meant importing the monetary policy of the United States Federal Reserve.
The core issue in 2008 was a stark policy divergence: while the US Federal Reserve was aggressively cutting interest rates to combat the unfolding global financial crisis and domestic recession, the UAE's economy was overheating. Inflation in the Emirates soared to a record high of 11.1% in 2008, driven by a booming real estate sector, high oil prices in the first half of the year, and rising food and rental costs. The Fed's rate cuts forced the UAE Central Bank to lower its own rates in step to maintain the peg, thereby exacerbating domestic inflation by making borrowing cheaper and fueling further speculative investment, even as local economic conditions demanded tighter monetary policy.
Consequently, 2008 was a year of intense speculation and debate about whether the UAE would abandon or revalue its dollar peg. Market pressure and analyst commentary were frequent, with many arguing a revaluation would help curb inflation. However, the UAE authorities remained steadfast in their commitment to the peg, emphasizing long-term stability over a short-term fix. The government chose to address inflation through fiscal measures—such as increasing public sector wages and implementing subsidies—and by allowing greater appreciation pressure to be absorbed within the narrow band of the peg. The global financial crisis that intensified in late 2008 ultimately dampened inflationary pressures, ending the immediate revaluation debate but leaving a lasting discussion on the long-term suitability of the dollar peg for the UAE's economy.
The core issue in 2008 was a stark policy divergence: while the US Federal Reserve was aggressively cutting interest rates to combat the unfolding global financial crisis and domestic recession, the UAE's economy was overheating. Inflation in the Emirates soared to a record high of 11.1% in 2008, driven by a booming real estate sector, high oil prices in the first half of the year, and rising food and rental costs. The Fed's rate cuts forced the UAE Central Bank to lower its own rates in step to maintain the peg, thereby exacerbating domestic inflation by making borrowing cheaper and fueling further speculative investment, even as local economic conditions demanded tighter monetary policy.
Consequently, 2008 was a year of intense speculation and debate about whether the UAE would abandon or revalue its dollar peg. Market pressure and analyst commentary were frequent, with many arguing a revaluation would help curb inflation. However, the UAE authorities remained steadfast in their commitment to the peg, emphasizing long-term stability over a short-term fix. The government chose to address inflation through fiscal measures—such as increasing public sector wages and implementing subsidies—and by allowing greater appreciation pressure to be absorbed within the narrow band of the peg. The global financial crisis that intensified in late 2008 ultimately dampened inflationary pressures, ending the immediate revaluation debate but leaving a lasting discussion on the long-term suitability of the dollar peg for the UAE's economy.
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