The question of which currency to take to Dubai is of interest not only to vacationers, but also to potential investors. The currency in the UAE is the dirham (AED). It was put into circulation on May 19, 1973. Since 1997, the dirham has been pegged to the US dollar exchange rate and retains a fixed value: 3.6 AED to 1 $.
An overview of the Arab currency and its role in the global economy
The United Arab Emirates has a strong economy with high GDP per capita and low inflation: by the end of 2022, these figures amounted to $53,700 and 4.8%, respectively. The stability of the local market attracts investors who seek to invest in a reliable asset during a period of economic uncertainty.
In the UAE, the currency is supported by economic stability. The latter is due to oil reserves, which make a significant contribution to its GDP, as well as the active development of the tourism sector. Among the main reasons to buy dirhams are:
- stable exchange rate;
- high liquidity;
- low inflation rate.
The advantages of the Dubai currency make it a strong competitor in the global market.
The main currencies in Dubai and the UAE
Dirhams are used for calculations in the country. They are used for all types of transactions: from shopping in shops and restaurants to paying for services and real estate in Dubai. In parallel, dollars and euros are in use. They are usually used in tourist locations. Most often, when asked what currency to take in the UAE, dollars are recommended. However, it is important to keep in mind that they are not accepted everywhere. It is better to make payments in local money to avoid unfavorable exchange rates or additional fees.
There are no difficulties with where to buy dirhams. You can use the services of exchange offices, banks or vending machines, which are available at airports, shopping malls and many other places throughout the emirate.
You can also exchange rubles for dirhams, but in this case it is worth considering the unstable exchange rate. Due to its fluctuations, the amount may change after the exchange, so dollars are safer, especially for large purchases.
Currency regulations
There are no currency regulations as measures taken by the State to control and manage the exchange and trade of national currency with foreign citizens. In the United Arab Emirates, residents and non-residents can have fully convertible accounts in the country or abroad in dirhams or in foreign monetary units.
The taxation system is no less attractive for foreign investors. Those planning to buy a house in Dubai will benefit from the information that there are no income taxes here. You can rent a house, resell it and have no tax obligations to the state.
Role in international trade
The Middle East is a major trading region, historically serving as a crossroads between east and west and north and south. In addition, its rich reserves of oil and natural gas have made it a major player in the global energy market for decades. However, the economic importance of the Middle East and the United Arab Emirates goes far beyond energy exports, as the production of textiles, electronics, equipment and many other goods is also developed here. Fluctuations in the exchange rate have a significant impact on trade, but the stability of the Arab dirhams leads to the fact that both exports and imports do not change in volume due to price spikes.
Forecasts and trends of the foreign exchange market
As mentioned above, the dollar exchange rate in Dubai is pegged to the national currency. Given that the country has all the necessary resources for further development, there is no need to fear sharp fluctuations in the exchange rate. This is confirmed by the long-term situation in the foreign exchange market. The pandemic, the instability of the geopolitical situation, and international conflicts do not affect Dubai’s currency, which makes investments safe and potentially profitable. There is no need to fear that it will devalue.
The Government of the United Arab Emirates is actively engaged in a variety of economic activities, reducing dependence on oil revenues and stimulating the development of other areas, including tourism, housing and the financial sector. These diversification efforts proved to be especially important during the period of declining oil prices, thanks to which the country’s stable economic growth was maintained.
The impact of digitalization on the payment scheme
Digitalization in the UAE has had a significant impact on the simplification of monetary transactions and settlements. In recent years, the Emirates has introduced many innovative solutions and technologies that have transformed the financial sector. Here are the main aspects of this transformation:
- Mobile payments and applications. Mobile payment systems and applications such as Apple Pay, Samsung Pay and local services such as Beam and Emirates Digital Wallet are actively used in the country. These applications provide users with a convenient and secure way to make everyday payments and transfers.
- Digital banks and banking services. Many banks in the UAE are actively integrating digital technologies, offering online banking and mobile applications for account management, money transfers and bill payments. This greatly simplifies financial transactions and makes them more accessible.
- Blockchain and cryptocurrencies. The UAE is actively researching and implementing blockchain technologies to improve the security and efficiency of financial transactions. In addition, there is a growing interest in cryptocurrencies and digital assets as a means for transactions and investments in the country.
- Contactless payments. NFC (Near Field communication) technology allows you to make fast and secure payments in stores and public transport. This is convenient for consumers and helps to reduce the time for calculations.
- Government digital platforms. The UAE government is developing digital platforms to simplify various government services, including the payment of government fees. These platforms make the process more transparent and efficient.
- Innovations in the fintech sector. Fintech startups in the UAE offer various innovative solutions such as digital wallets, P2P lending platforms and personal finance management tools, which contributes to the development of the financial sector as a whole.
- International cooperation. The UAE actively cooperates with other countries and international organizations to develop and standardize digital financial technologies, which contributes to strengthening international financial ties.
Digitalization in the UAE has significantly increased the level of accessibility and convenience of financial services, making them safer and more efficient. This not only facilitates the daily lives of citizens and residents, but also contributes to the economic growth and development of the country.
Below we will look at some of these practices in more detail.
Transactions in cryptocurrency
Today, the region of the Middle East and North Africa is in the top 10 for the use of cryptocurrencies in the world: The total value of transactions from July 2022 to June 2023 amounted to $389.8 billion. This is due to the fact that the new digitalization can open up many cross-border opportunities. The use of blockchain helps to expand access to financial services and faster money transfers.
According to Deepa Raja Carbone, managing director and vice chairman of the Virtual Asset Regulatory Authority (VARA), the country’s market is dominated by expats. They send money back to their homeland, and virtual assets help simplify this process.
Remote purchase of real estate
Up to 70% of real estate transactions in Dubai take place remotely. Such a purchase can be paid for both traditionally, by bank transfer, and using cryptocurrency. This method is gaining popularity in the primary market: many developers offer to make payments by crypto transfer. There may be some restrictions regarding specific platforms and types of digital currency, so it is better to consult a specialist.
The secondary market is more conservative, however, such transactions are also possible here. Some sellers may require that the cryptocurrency be converted into real money (for example, dirhams). In this case, the client can use the services of special companies that will solve this issue for a small commission.
Legislative regulation of online transactions
According to the new rules introduced by the Ministry of Economy (MoE) and the Ministry of Justice (MoJ), all real estate agents, brokers and law firms are required to provide reports on real estate purchase and sale transactions. This applies to transactions for which payment is made in one of three ways:
- cash payments, including one-time or multiple payments in the amount of 55,000 AED ($15,000);
- payments using virtual assets;
- transactions in which funds originate from virtual assets.
These measures were introduced as part of a strategy to strengthen the fight against money laundering, as well as to increase the transparency of financial transactions in the real estate sector.
Conclusion
If we talk about which currency in Dubai is best suited for transactions, dollars and dirhams remain the most common and stable option. For investors, the most popular investment format is housing. All types of real estate are represented on our portal. Experts will help you choose and buy a house or apartment in Dubai, advise you in which currency you can pay for the purchase. A convenient search system allows you to form an idea of prices in real time. Explore offers from developers and real estate agencies right now so that you don’t miss the most profitable options!
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