The AED/CNY exchange rate has a bearish outlook, indicating a potential further decline.
Key drivers include a narrowing interest rate differential as the UAE is set to maintain interest rates while Goldman Sachs anticipates cuts in China's rates, creating a more favorable environment for the CNY. Additionally, China's economic recovery is projected, with growth driven by stimulus measures, contrasting with more measured growth in the UAE's economy.
In the near term, the exchange rate is expected to trade within a narrow range, likely staying around current levels and past averages as it has recently demonstrated stability.
An upside risk could stem from stronger-than-expected economic indicators in the UAE, promoting the AED, while a downside risk may arise from increased CNY strength due to more aggressive monetary easing by China, potentially pushing the rate lower.