Karachi, June 4, 2025 – The latest data from the currency market indicates that the exchange rate of the UAE Dirham (AED) stands at 76.44 PKR against the Pakistani Rupee (PKR).This consistent rate follows a period of stability in the exchange rates of AED and PKR, bolstered by steady remittances and favorable economic conditions in both the UAE and Pakistan.Grasping the AED-PKR Exchange RateThe exchange rate between the UAE Dirham and the Pakistani Rupee is affected by market dynamics and central banks’ decisions. Since 1997, the Dirham has been tied to the US Dollar at roughly 3.67 AED/USD, thanks to the UAE Central Bank’s policy. This pegged exchange rate helps maintain the Dirham’s value relative to the US Dollar, which is underpinned by the UAE’s oil-driven economy and its efforts to diversify into various sectors.In contrast, the value of the PKR is governed by a floating exchange rate system. Our analysis shows that it is mainly determined by the demand and supply of foreign currencies. The State Bank of Pakistan intervenes periodically to reduce volatility. Factors such as remittances, foreign reserves, trade balance, and inflation—highlighted by the significant $3.1 billion remitted from the UAE in February 2025—play crucial roles in determining the PKR’s value.The daily conversion rates for AED to PKR are set by interbank and open market transactions. The current buying rate is set at 76.67 PKR, while banks and exchange companies have a selling rate of approximately 77.25 PKR, which may include a small additional charge for sellers. This information is updated daily at 8:00 AM Pakistan Standard Time and can vary throughout the day based on market conditions.Implications of StabilityThe fixed exchange rate of 76.44 PKR for the UAE Dirham has significant effects on Pakistan and the more than two million Pakistani expatriates living in the UAE. This stable rate instills confidence in them when sending remittances back home to assist their families in Pakistan. Additionally, it benefits trading firms involved in importing and exporting goods such as food, clothing, and construction materials between Pakistan and the UAE, thus eliminating the risks that currency fluctuations can pose.For the economy of Pakistan, a stable AED-PKR exchange rate facilitates efficient remittance flows, which are vital for enhancing foreign exchange reserves. Analysts believe that this stability arises from prudent trading practices, robust reserves, and a lack of speculative pressures. The UAE serves as a pivotal economic partner for Pakistan, with remittances contributing to the stabilization of the PKR. However, the managed floating system of the PKR makes it susceptible to domestic influences such as inflation and trade deficits. Currency analysts advise that even though the AED-PKR exchange rate is currently stable, market participants should remain vigilant for signs of volatility stemming from external factors like changes in oil prices and geopolitical tensions that may impact the value of the US Dollar and, consequently, the Dirham.Summary of AED and PKRThe UAE Dirham was established in 1973 as the official currency of the UAE to replace the Qatar and Dubai Riyal. It is issued and managed by the UAE Central Bank and is divided into 100 fils. It is abbreviated as AED, and the peg to the US Dollar is sustained by the UAE’s oil wealth, sound financial management, and its role as a global trade center. The Dirham is utilized across all seven emirates, especially in major cities like Dubai and Abu Dhabi, as well as tourist spots.The Pakistani Rupee, which was introduced in circulation in 1947, serves as the official currency of Pakistan. It is regulated by the State Bank of Pakistan.