Outlook
The AED is likely to stay anchored near the USD peg of 3.6725 per USD, supported by policy alignment with the US Federal Reserve and ongoing macro resilience. AE Coin introduction and solid domestic credit growth underpin a stable backdrop for the dirham. In practice, expect the AED to hold within narrow ranges against USD, with cross-rates moving on cross-market dynamics (notably USD strength, oil prices, and risk sentiment).
Key drivers
- Peg and policy alignment: UAE maintains the dirham peg at 3.6725 per USD and the Central Bank’s policy stance tracks the US Federal Reserve, with a base rate around 4.4% (as of December 2024). This provides rate and currency stability.
- AE Coin development: The AE Coin, a UAE Dirham-pegged stablecoin, aims to modernize payments and liquidity, supporting digital adoption and potentially easing domestic settlement flows.
- Domestic momentum: UAE credit growth stood at 14.7% year-on-year as of November 2025, signaling robust credit expansion and favorable macro momentum.
- Current cross-rate context: AED/USD is steady at 0.2723 USD per AED; AED/EUR around 0.2302 (near 90-day lows, about 1.5% below the 3-month average of 0.2337, within 0.2302-0.2372 range); AED/GBP around 0.1996 (about 2.3% below the 3-month average of 0.2044, within 0.1995-0.2091 range); AED/JPY around 42.40 (near its 3-month average, within 41.41-43.32).
Range
AED/USD is effectively stable around 0.2723 USD per AED via the peg. AED/EUR sits near 0.2302 EUR per AED, 90-day lows and about 1.5% below the 3-month average of 0.2337, within a 0.2302-0.2372 range. AED/GBP sits around 0.1996 GBP per AED, about 2.3% below the 3-month average of 0.2044, within a 0.1995-0.2091 range. AED/JPY is about 42.40 JPY per AED, near the 3-month average, within a 41.41-43.32 range.
What could change it
- U.S. policy shifts: A surprise in Federal Reserve path (rate hikes, cuts, or inflation surprises) could alter USD strength and push cross-rates with the AED.
- UAE policy moves: Any changes to the peg stance or monetary policy guidance from the Central Bank of the UAE could affect dirham stability and cross-rates.
- Domestic data shifts: Unexpected turns in UAE inflation, growth, or credit trends could influence expectations and FX flows.
- AE Coin developments: Regulatory decisions, adoption milestones, or liquidity implications of AE Coin could impact digital-payment dynamics and asset liquidity.
- Global risk and commodities: Shifts in risk sentiment, oil prices, or geopolitical events can drive cross-market flows into or out of AED-denominated instruments.
