The current market bias for the AED to INR exchange rate is range-bound.
Key drivers include the interest rate differential, where the UAE's stable monetary policy contrasts with India's projected depreciation alongside concerns over future rate adjustments. Dubai's strong economic growth projections, particularly in non-hydrocarbon sectors, offer support for the AED. Additionally, the ongoing introduction of the Digital Dirham may enhance financial efficiency in the UAE.
The expected near-term trading range indicates stability with minor fluctuations around current levels, likely remaining within a narrow band.
An upside risk could arise from unexpected economic improvements in the UAE or significant foreign investments, potentially boosting the AED further. Conversely, a downside risk may stem from India’s anticipated currency depreciation toward 90 INR per USD, which could apply downward pressure on the INR, impacting the AED to INR rate.