Bias: Range-bound, as the AED is near the 90-day average and within the middle of the 3-month range.
Key drivers:
• Rate gap: Both the UAE and Qatari central banks maintain similar monetary policies, with their currencies pegged to the US dollar, which supports stability for both AED and QAR.
• Risk/commodities: Oil prices are trending above the average, which positively impacts the Qatari economy and may lend strength to the QAR through increased revenues.
• Economic growth: Qatar's projected GDP growth is expected to rise, driven by non-hydrocarbon sectors which can bolster demand for the QAR.
Range: The AED/QAR pair is likely to drift within its recent stable range, reflecting a balance as both currencies perform steadily.
What could change it:
• Upside risk: A significant rise in oil prices could enhance QAR's strength, leading to a favorable shift in the exchange rate.
• Downside risk: Any unexpected changes in monetary policy by either central bank could create volatility and impact the pair adversely.