The recent forecast for the AED to PKR exchange rate reflects a complex interplay of geopolitical, economic, and market factors impacting both currencies. Analysts suggest the UAE Dirham (AED) may face downward pressure owing to rising geopolitical tensions, particularly following Israel's military incursions into Iran that led to market volatility and increasing oil prices. As oil remains a critical component of the UAE's economy, any turbulence in the region could impact investor confidence and the Dirham's strength.
Economic growth prospects for the UAE appear robust, with forecasts suggesting a 6.2% GDP growth driven by advancements in tourism, real estate, and international trade. However, analysts note a slowdown in the non-oil sector's performance in recent months, raising concerns about diversification efforts that could influence the AED's long-term stability. The UAE's pursuit of a trade agreement with the U.S. aims to alleviate tariffs on steel and aluminum exports, potentially affecting trade balances and further influencing the AED.
On the other hand, the Pakistani Rupee (PKR) is grappling with significant challenges. The imposition of a 29% reciprocal tariff by the U.S. has raised concerns regarding trade dynamics, adversely impacting Pakistan's export capabilities. Furthermore, escalated tensions between Pakistan and India following military actions have heightened the risks associated with the PKR, potentially deterring foreign investment.
Despite these factors, reports indicate that migrant workers have been sending record remittances back to Pakistan, providing some support for the PKR. However, this trend may not be sustainable given the uncertain job market in the Middle East.
Currently, the AED to PKR exchange rate is at 14-day lows near 77.21, showing stability within a 1.5% range between 76.49 and 77.67 over the past three months. Market analysts express caution, suggesting that while the AED may hold steady in the short term due to favorable growth forecasts, external geopolitical risks and domestic challenges for the PKR could lead to increased volatility in this currency pair. Stakeholders should monitor these developments closely, as they could significantly affect costs for travelers and businesses engaged in international transactions.