1000 Dirhams – United Arab Emirates

In 2013, the United Arab Emirates' currency situation was defined by its long-standing and unwavering peg to the US dollar, established in 1997. The dirham was fixed at a rate of approximately AED 3.6725 per USD, a policy managed by the UAE Central Bank. This peg provided critical stability for the UAE's import-dependent, oil-exporting economy, anchoring inflation expectations and fostering a predictable environment for foreign investment and trade. It was a cornerstone of the country's economic policy, particularly as the UAE continued to solidify its position as a global hub for commerce, tourism, and finance.

The year saw the peg face indirect pressures from external monetary policy, specifically the US Federal Reserve's "taper tantrum." As the Fed signaled a potential rollback of its quantitative easing program, global capital flows shifted, strengthening the US dollar and, by extension, pulling the dirham higher alongside it. This created some economic headwinds, as a stronger dirham made the UAE's non-oil exports slightly less competitive and could dampen tourism from regions with weaker currencies. However, the domestic debate focused not on abandoning the peg, but on managing its side-effects and diversifying the economy to reduce vulnerability to dollar-linked shocks.

Ultimately, 2013 reinforced the UAE's commitment to the dollar peg as a strategic choice outweighing short-term fluctuations. The stability it offered was deemed essential for continued growth in banking, real estate, and major projects like Dubai's preparation for Expo 2020. Discussions around potentially pegging to a basket of currencies, which had surfaced after the 2008 financial crisis, remained on the periphery. The prevailing consensus was that the benefits of dollar stability—especially for a hydrocarbon economy with significant dollar-denominated revenues—far outweighed the costs, a position firmly backed by the UAE's substantial foreign exchange reserves.