The recent developments around the UAE Dirham (AED) and the Qatari Riyal (QAR) suggest a complex interplay that could influence their exchange rate. Analysts have noted significant factors affecting the AED, particularly the currency swap agreement between the UAE and Turkey, which aims to boost liquidity and financial transactions. Coupled with a recent interest rate cut by the UAE Central Bank, these factors appear to enhance investor confidence and liquidity in the UAE markets.
In contrast, the QAR has shown resilience, supported by a gradual improvement in Qatar's GDP growth forecast by the IMF, which is expected to reach 2% in 2024-25. The increase in international reserves further strengthens the QAR’s stability, with reserves reported to have risen to 260 billion riyals. However, the ongoing decline of the US Dollar, to which the QAR is pegged, could introduce additional volatility to the QAR's value.
As of recent data, the exchange rate of AED to QAR is hovering near 90-day lows at 0.9897, slightly below its three-month average. Trading has remained stable within a narrow range between 0.9897 and 1.0006, reflecting cautious sentiment among traders. This stability comes despite fluctuations in oil prices, which have seen Brent crude trading around $62.38—a notable 4.1% drop from its three-month average and indicative of prevailing market volatility impacting currencies reliant on oil exports.
Given these dynamics, experts suggest that the AED-QAR exchange rate could remain influenced by domestic policy changes in the UAE, international economic conditions, and movements in oil prices. Markets will continue to monitor these factors closely, as they hold significant weight in shaping the short-term forecasts for the exchange rate.
