The dirham is the official currency of the United Arab Emirates. The dirham, often abbreviated as DH or Dhs, is a decimal currency divisible into 100 fils. The name derives from the Greek drachmae, which has survived in the region due to centuries of trading with the Greeks. The dirham is a relatively new currency, having been introduced in 1971 to replace the Qatar and Dubai riyal. The riyal was circulated in the United Arab Emirates beginning in 1966, with the exception of Abu Dhabi, which used the Bahraini dinar. When the dirham was introduced, it replaced the riyal at a ratio of one-to-one and the Bahraini dinar at 10 dirham: 1 dinar. Before 1966, the currency of the United Arab Emirates was the Gulf rupee, with a brief transitional period when the Saudi riyal was accepted as legal tender. In 1978, the dirham was pegged to the to the International Monetary Fund’s Special Drawing Rights (SDRs). This had practically the same effect as being pegged to the U.S. dollar except in limited circumstances. After being pegged to the SDRs for nearly 20 years, the dirham was officially pegged to the U.S. dollar in 1997 at 3.6725 AED: 1 USD.
Although the dirham was officially adopted in 1971, coins for the new monetary system were not put into circulation until 1973. The coins are in denominations of 1 dirham and under. The 1-fil, 5-fil and 10-fil coins are bronze. The 25-fil, 50-fil and 1 dirham coins are minted in cupronickel. The fil-denominated coins were designed to be of the same size and composition as the Qatar and Dubai coins they replaced, but the 50-fil and 1 dirham coins were redesigned in 1995. In practice, the 1-fil, 5-fil and 10-fil coins are rarely used in everyday life. Most transactions are rounded to the nearest quarter-dirham. In addition to the standard coins, the Central Bank of the United Arab Emirates has also minted a series of commemorative coins celebrating significant events and figures.
Banknotes were also first circulated in 1973. The first notes printed were in denominations of 1, 5, 10, 50, 100 and 1000 dirham. Later, the 1 and 1000 dirham notes were discontinued. More recently, the 1000-dirham note was reintroduced along with a 20-dirham note and a 200-dirham note.