AED/INR Outlook:
The AED/INR rate is currently slightly positive, trading above its recent average and near the middle of its three-month range. The stability of the AED against the Indian rupee supports this outlook.
Key drivers:
- Rate gap: The UAE Central Bank's recent rate cut is less impactful compared to India's ongoing depreciation tendencies due to flexible exchange rate policies.
- Risk/commodities: Oil prices remain above average, supporting the AED as the UAE benefits from its oil revenues, positively influencing the currency.
- One macro factor: The ongoing US-India trade agreement has led to notable increases in Indian exports, strengthening the INR but not enough to outpace the AED.
Range:
The AED/INR rate is likely to hold steady within the recent range, showing minimal volatility.
What could change it:
- Upside risk: A significant rise in oil prices could strengthen the AED further.
- Downside risk: Increased geopolitical tensions may lead to greater demand for the USD, putting downward pressure on the INR.