The market for the AED to AUD exchange rate is currently range-bound, showing little directional bias.
Key drivers include the interest rate differential, with expectations for the Reserve Bank of Australia to raise rates in early 2026 due to rising inflation. This is in contrast to the UAE's steady policy surrounding the Digital Dirham, expected to stabilize the AED. In addition, the positive growth projections for the UAE’s GDP support the AED's position against the AUD.
The near-term trading range is likely to remain stable, fluctuating within the recent 4.6% range observed.
An upside risk could emerge from stronger-than-expected economic performance in Australia, potentially driving further rate hikes. Conversely, any geopolitical or economic instability in the UAE or a surprising slowdown in Australian growth could lead to downward pressure on the AED against the AUD.