AED/MYR Outlook:
Slightly weaker, but likely to move sideways as the rate is currently below its recent average and mid-range, reflecting a lack of strong drivers.
Key drivers:
• Rate gap: The UAE Central Bank's interest rate adjustments in line with the US Federal Reserve's policies help maintain the AED's peg to the dollar, affecting its value against the MYR.
• Risk/commodities: Recent oil prices have jumped above their average, which might support the AED, while volatility in these prices can create uncertainty for the MYR.
• One macro factor: Malaysia's strong GDP growth, driven by domestic consumption and key sectors, supports the Ringgit's strength, overshadowing some of the AED's fundamentals.
Range:
The AED/MYR exchange rate is likely to drift within its recent 3-month range, lacking significant momentum in either direction.
What could change it:
• Upside risk: Any significant recovery in oil prices could lead to increased support for the AED.
• Downside risk: A surge in US interest rates could strengthen the dollar, impacting the AED negatively against the MYR.