United Arab Emirates Sets a New Standard
The United Arab Emirates (UAE) introduced a new symbol for its currency, the dirham, shortly before Eid al-Fitr, which marks the end of the fasting month of Ramadan.
Written by Gérard Al-Fil
The new symbol, published by the UAE Central Bank in Abu Dhabi at the end of March, resembles the letter D with two horizontal lines in the middle, similar to the euro. The official currency is black, while the digital dirham was designed in the colours of the national flag: black, red, green, and white.
The Gulf state hopes that the new «logo» will replace the previously common abbreviations AED or Dhs for the dirham, the Gulf state's legal tender, in international payments. It shall become common like the dollar symbol $.
The new symbol. (Image: provided)
The UAE is the first Arab country to take this step. The digital version is intended to prevail in payment transactions in the blockchain business, i.e., for tokens. Central Bank Governor Khaled Balama said in the media statement, «The digital dirham, as a blockchain-based platform with state-of-the-art features, is expected to significantly improve financial stability, inclusion, resilience, and the fight against financial crime.»
The term Dirham is derived from the word drachma. The drachma was the ancient and modern means of payment in Greece until it was replaced by the common European currency, the euro, on January 1, 2002.
Vision of a common Gulf currency
Around the turn of the millennium, the six Gulf states united in the Gulf Cooperation Council (a kind of mini-EU in the Middle East) openly considered a common currency. However, the project never materialised because the member states – the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar, and Oman – pursued too different economic interests. However, a single GCC currency remains a long-term goal. Furthermore, all six GCC banknotes are accepted at almost all cash registers in the Gulf region, and local cash is used in return.
With the exception of Kuwait, whose currency, the dinar, is based on a basket of currencies, all other Gulf currencies are pegged to the US dollar. One dollar always yields 3,667 UAE dirhams. The reason: the black gold is largely priced in the greenback worldwide, and the market value of a barrel of oil (159 litres) – regardless of whether it's North Sea Brent Crude Oil or WTI from Texas – is always valued in dollars on the financial markets.
This means that Swiss and euro-denominated citizens can buy more in Dubai given the current dollar weakness because they can exchange more dirhams for the Swiss franc or the euro at the exchange office.
