February 23, 2026
Methodology About Newsletter
WE THE UAE 2031
The Vanderbilt Terminal for the UAE's National Transformation
INDEPENDENT GLOBAL INTELLIGENCE FOR THE UNITED ARAB EMIRATES
UAE GDP: AED 2.03T ▲ 5.7% | Non-Oil GDP Share: 84.3% ▼ -5.2pp | FDI Inflows: $45.6B ▲ 48.7% | GDP Growth: 4.0% ▲ -0.3pp vs 2023 | Inflation: 1.7% ▼ +0.0pp vs 2023 | Female Participation: 55.1% ▲ +0.6pp vs 2023 | Population: 11.0M ▲ 4.8% | Emiratisation Rate: 12.5% ▲ 2.1pp | Global Competitiveness: #7 ▲ 3 places | Clean Energy Capacity: 7.2 GW ▲ 18.4% | ADX Index: 9,842 ▲ 4.7% | DFM Index: 4,621 ▲ 6.2% | UAE GDP: AED 2.03T ▲ 5.7% | Non-Oil GDP Share: 84.3% ▼ -5.2pp | FDI Inflows: $45.6B ▲ 48.7% | GDP Growth: 4.0% ▲ -0.3pp vs 2023 | Inflation: 1.7% ▼ +0.0pp vs 2023 | Female Participation: 55.1% ▲ +0.6pp vs 2023 | Population: 11.0M ▲ 4.8% | Emiratisation Rate: 12.5% ▲ 2.1pp | Global Competitiveness: #7 ▲ 3 places | Clean Energy Capacity: 7.2 GW ▲ 18.4% | ADX Index: 9,842 ▲ 4.7% | DFM Index: 4,621 ▲ 6.2% |

Definition

A dollar peg is a monetary policy arrangement in which a country fixes its currency’s exchange rate to the United States dollar at a predetermined ratio. The central bank commits to buying or selling its currency at this fixed rate, maintaining foreign exchange reserves to defend the peg. Dollar pegs are common among oil-exporting nations whose primary commodity revenues are denominated in US dollars, providing exchange rate predictability for trade and investment.

UAE Context

The UAE dirham has been pegged to the US dollar at 3.6725 AED per USD since November 1997. The Central Bank of the UAE maintains this peg through substantial foreign exchange reserves exceeding USD 100 billion. Because oil and gas exports are priced in dollars, the peg eliminates currency risk on the UAE’s primary revenue stream. However, the peg also means the UAE effectively imports US monetary policy, requiring interest rates to track Federal Reserve decisions. During periods of US rate hikes, this can tighten financial conditions in the UAE even when domestic economic conditions might warrant looser policy.

Key Data

  • Peg rate: 3.6725 AED = 1 USD
  • Peg established: November 1997
  • Central Bank reserves: Over USD 100 billion
  • Other GCC pegs: Saudi Arabia, Bahrain, Qatar, and Oman also maintain dollar pegs
  • Policy implication: UAE interest rates closely track US Federal Reserve rates

Significance for Vision 2031

The dollar peg provides the monetary stability that underpins the UAE’s Vision 2031 goals for foreign investment attraction and financial center development. While some economists debate whether a flexible exchange rate might better serve a diversifying economy, the peg remains a cornerstone of investor confidence and trade facilitation. Any future policy evolution would represent a major structural shift in the UAE’s economic framework.