AED/OMR Outlook:
The AED/OMR exchange rate is slightly positive and likely to move sideways as it trades near its 3-month average and 14-day highs. Overall, stability in the UAE Dirham supports the current level.
Key drivers:
• Rate gap: The UAE Central Bank’s stable key rate keeps the Dirham aligned with the US Dollar, providing strong support against the Omani rial.
• Risk/commodities: Oil prices are near 90-day highs, benefiting the OMR as oil revenue remains crucial to the Omani economy.
• Macro factor: Continued weakening of the Indian, Pakistani, and Philippine currencies enhances the value of remittances sent through the Dirham, boosting demand.
Range:
Expect the AED/OMR to hold within its recent range, hovering around current levels.
What could change it:
• Upside risk: A sustained rise in oil prices could strengthen the Omani Rial further.
• Downside risk: Any significant weakening of major Asian currencies could reduce demand for the Dirham.