The current market bias for the AED to CNY exchange rate is bearish.
Key drivers include interest rate differentials, as the UAE maintains higher rates compared to China's expected cuts. Additionally, strong GDP growth projections for the UAE can support the AED, while China's cautious monetary stance reflects economic challenges.
Over the next 1-3 months, the exchange rate may trade within a tighter range due to recent pricing around 90-day lows.
Upside risks could arise if the UAE's digital Dirham implementation fosters increased trade and investment, bolstering the AED. Conversely, a more aggressive monetary easing by the People's Bank of China might lead to further depreciation of the AED against the CNY.
Keeping an eye on upcoming economic indicators from both nations will be crucial for those involved in currency transactions.