AED/QAR Outlook:
Slightly positive, but likely to move sideways due to the current rate being near its 90-day average and lacking a clear driver.
Key drivers:
• Rate gap: The stability of the UAE Dirham is maintained by its peg to the US dollar, while the Qatari Riyal also enjoys this stability, limiting volatility between the two currencies.
• Risk/commodities: With oil prices currently around 5% above their three-month average, strong oil revenues could support both the AED and QAR, influencing foreign reserves favorably.
• Monetary Policy Alignment: Stay-at-home policies and interest rate adjustments in both countries suggest continued economic stability, further underpinned by the UAE's proactive monetary policies.
Range:
Expect the rate to hold within a stable range, as it has been trading around its recent average.
What could change it:
• Upside risk: A significant increase in oil prices could boost the AED, given its importance to the UAE's economy.
• Downside risk: Any unfavorable adjustments to the US dollar's outlook could weaken the QAR, as both currencies are closely tied to it.
