AED/HKD Outlook: The outlook is slightly positive, but likely to move sideways as the rate is above its recent average and near 90-day highs without a strong current driver.
Key drivers:
• Rate gap: The UAE Dirham's stability is supported by its peg to the US Dollar, providing consistency compared to the Hong Kong Dollar which faces pressure from recent interventions.
• Risk/commodities: Current oil trends are stable, helping to support the UAE economy and, in turn, the AED.
• One macro factor: Strong credit growth in the UAE indicates a robust economic environment, aiding the Dirham’s strength.
Range: The AED/HKD is expected to hold within its recent 3-month range, reflecting current stability.
What could change it:
• Upside risk: A further tightening of monetary policy by the US Federal Reserve could strengthen the AED.
• Downside risk: Increased interventions from the HKMA to defend the HKD might pressure the AED further down.
