The AED is pegged to the USD for several strategic reasons. First, oil and gas — which account for a significant share of UAE government revenue — are priced and traded globally in US Dollars. A USD peg eliminates exchange rate risk on these revenues. Second, the peg provides macroeconomic stability and predictability, which is essential for attracting foreign direct investment. Third, the UAE's role as a global trade and logistics hub benefits from a stable, internationally trusted currency. The peg is backed by the UAE's substantial foreign exchange reserves, estimated at over $100 billion.