AED/PHP Outlook: Slightly positive, but likely to move sideways, given the rate's position near its recent average and absence of strong drivers.
Key drivers:
• Rate gap: The UAE's Central Bank maintains a robust monetary policy, contrasting with the Philippines' monetary easing signals from its central bank, which may impact the peso negatively.
• Risk/commodities: Oil prices are trending above average, which supports the UAE Dirham due to its connection to oil revenue, strengthening its appeal.
• One macro factor: The Bangko Sentral ng Pilipinas' (BSP) recent signals of allowing further peso depreciation point to a weakening outlook for the peso against stronger currencies.
Range: Expect the AED/PHP to hold within its recent trading range, likely oscillating around current levels without significant breaks.
What could change it:
• Upside risk: Stronger oil prices or improved economic conditions in the UAE could enhance the Dirham's value.
• Downside risk: Continued peso weakness driven by BSP policies or negative economic news could further pressure the exchange rate.
