AED/HKD Outlook:
Bullish, as the rate is above its recent average and near recent highs, supported by strong oil revenues.
Key drivers:
• Rate gap: The UAE Dirham’s peg to the US Dollar ensures stability, while the Hong Kong Dollar's peg faces pressures from market volatility.
• Risk/commodities: Global oil prices are above average, bolstering the UAE’s foreign reserves and supporting the Dirham's strength.
• One macro factor: The UAE's investment in economic diversification significantly attracts foreign investment, which positively influences the Dirham.
Range:
Expect the AED/HKD to hold steady within its recent 3-month range, with potential for slight upward movement.
What could change it:
• Upside risk: A substantial rise in global oil prices could further strengthen the AED.
• Downside risk: Increased market volatility affecting the HKD could lead to a momentary retreat in the AED.