AED/PKR Outlook:
The AED/PKR is slightly weaker, but likely to move sideways. Currently trading just below its 3-month average and within its usual range, there’s no clear momentum pushing it in either direction.
Key drivers:
- Rate gap: The UAE Central Bank’s recent rate cut has not weakened the AED significantly due to the currency being pegged to the US Dollar.
- Risk/commodities: Global oil prices remain stable, which helps maintain the value of the AED, while influencing the PKR through import costs.
- Macro factor: Pakistan's economy shows signs of recovery with increases in foreign exchange reserves, providing some support for the PKR.
Range:
The AED/PKR is expected to hold its ground within the recent range of 75.60 to 76.93, given its current position.
What could change it:
- Upside risk: An increase in oil prices could bolster the AED further, enhancing the Dirham's strength against the PKR.
- Downside risk: If inflation rises sharply in Pakistan, it may weaken the PKR's position, pushing the AED higher.