Bias: bearish-to-range-bound, as the AED is currently below the 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The Central Bank of the UAE maintains its policy rate aligned with the US Federal Reserve, while Malaysia's sound economic growth is strengthening its currency.
• Risk/commodities: Oil prices are above their 3-month average, which benefits the MYR due to its oil exporting capacity, enhancing investor support.
• One macro factor: Malaysia's projected GDP growth of over 5% is bolstering investor confidence, aiding the MYR against the AED.
Range: The AED/MYR exchange rate is likely to hold steady or drift within its recent range, possibly testing the lowest levels.
What could change it:
• Upside risk: A significant rise in oil prices could support the AED.
• Downside risk: Continued weakness in the US dollar could further strengthen the MYR against the AED.