AED/CNY Outlook:
The AED/CNY exchange rate is currently below its recent average and is near the lower end of its three-month trading range. This suggests a slightly weaker, but likely to move sideways outlook in the near term.
Key drivers:
- Rate gap: The UAE Central Bank's recent decision to cut the base rate has not significantly weakened the AED compared to the CNY, which remains stable.
- Risk/commodities: The stability of oil prices has been beneficial for the AED, as it is closely linked to the oil market, whereas the CNY has seen more volatility recently.
- Macro factor: China's focus on maintaining yuan stability, particularly emphasized during the recent Central Economic Work Conference, may limit sharp fluctuations in its exchange rate.
Range:
Expect the AED/CNY to hold within its current range, likely not testing extremes soon.
What could change it:
- Upside risk: A stronger-than-expected recovery in the UAE economy could bolster the AED.
- Downside risk: Increased volatility in the global markets or further weakening of the AED against other currencies could pressure the rate downwards.
