AED/CNY Outlook:
The AED/CNY exchange rate is likely to decrease, as it currently trades below its recent average and is near recent lows.
Key drivers:
• Rate gap: The UAE Central Bank's recent rate cut aligns it closely with U.S. policy, while the PBOC's actions have aimed to strengthen the yuan against the dollar.
• Risk/commodities: The recent rise of oil prices supports the UAE’s economy, but volatility could affect the Dirham's strength.
• One macro factor: The Chinese economy shows stronger growth, rebounding from post-pandemic challenges, which could further bolster the yuan.
Range:
The AED/CNY is expected to drift lower, potentially testing recent lows due to the ongoing pressures on the Dirham.
What could change it:
• Upside risk: A significant increase in oil prices could enhance the Dirham's strength.
• Downside risk: Further weakness in China's economy or aggressive easing by the PBOC might increase downward pressure on the yuan.
