Corporate banking
Multi-currency accounts and FX
The dirham is pegged to the dollar, which removes one currency risk and hides another. Most UAE businesses lose more on FX spreads than they realise, because the cost is embedded in the rate rather than charged as a fee.
The reality
What the bank is actually deciding.
A multi-currency account holds balances in more than one currency under a single relationship, letting a business receive dollars, euros or sterling without converting on arrival. For a UAE company this matters less for dollars — the dirham is pegged to the US dollar at a fixed rate, so USD exposure is largely neutral — and considerably more for everything else. A company invoicing European clients in euros and paying suppliers in dirhams carries real currency risk and, more immediately, real conversion cost.
That conversion cost is where the money quietly goes. Banks generally do not charge a visible fee for FX; they apply a spread to the exchange rate, which means the cost is invisible unless you compare the rate you received against the interbank rate at that moment. On a business converting a few hundred thousand dirhams a month, a spread of a percentage point or two is a substantial and entirely unremarked expense. It is also negotiable — banks quote better rates to customers who ask, who consolidate volume, and who make clear they are comparing. Almost nobody asks.
What gets asked for
- AED
- Pegged to the US dollar at a fixed rate
- USD exposure
- Largely neutral for a UAE company because of the peg
- Other currencies
- Real exposure — EUR, GBP, INR, CNY
- Cost mechanism
- Spread on the rate, not a stated fee
- Negotiability
- Real, at volume, and rarely tested
- Alternatives
- Specialist FX providers, subject to their own onboarding
Where the time goes
The file
What to put in front of them.
- Work out your actual currency exposureWhich currencies you receive and which you pay out. If both are USD or AED, this is not your problem.
- Measure the spread you are being chargedCompare the rate received against the interbank rate at the time of conversion. Most businesses have never done this.
- Ask the bank to improve itRates quoted to customers who compare are better than rates quoted to customers who do not.
- Hold rather than convert where you also pay outA business receiving and spending euros should hold euros rather than round-tripping through dirhams.
- Consider a specialist provider for volumeSubject to their own onboarding, which for a UAE company is not always straightforward.
Related
Questions
Yes, at a fixed rate. That removes most USD currency risk for a UAE company and is why dollar invoicing is common here.
Usually nothing visible. The cost is a spread applied to the exchange rate, which is why it goes unnoticed.
Yes, particularly at volume. Rates are quoted rather than fixed, and customers who compare are quoted better ones.
If you both receive and pay in a currency, holding it avoids two conversions. If you only receive it, the question is when to convert, not whether.
One question
Where will the money actually come from?
Then the account is a cross-border file, and the compliance question is which countries and in which currencies. Name the corridors in the application rather than waiting to be asked — an unexplained payment from a jurisdiction the bank did not expect is what freezes accounts in month three.
What the file has to containOr just ask usThen substance is the question rather than geography. A local trading history, an Ejari and a customer list make this straightforward; a flexi-desk with no domestic contracts yet is where onboarding slows, and the fix is evidence rather than a different bank.
Why applications get declinedOr just ask usThen source of wealth carries the file, and 'savings' is not an answer. A share sale agreement, a property disposal, audited accounts from an overseas company or a series of tax returns are. Assemble that before the first meeting, not after the first question.
Evidencing source of fundsOr just ask us