Recent developments indicate a complex outlook for the AED to SAR exchange rate. Analysts note that geopolitical tensions in the region, particularly following Israel's military actions against Iran, have led to increased market volatility and rising oil prices. Such geopolitical strife typically affects regional currencies, potentially putting pressure on the UAE Dirham (AED) as investor sentiment reacts to uncertainty.
The Arab Monetary Fund's recent growth forecast for the UAE economy, projected at 6.2% for 2025, offers a more positive perspective. This growth is expected to be bolstered by a rebound in sectors such as tourism, real estate, and international trade. These factors may support the AED's value against the Saudi Riyal (SAR), encouraging confidence among investors and businesses.
However, the slowdown in the non-oil private sector growth, which marked its weakest performance in nearly four years in May, raises concerns about the UAE's economic diversification efforts. This could hinder the AED's potential appreciation, especially if the non-oil sector fails to regain momentum in the coming months.
Additionally, ongoing trade negotiations with the U.S. regarding tariffs on steel and aluminum could have future implications for the AED. A successful trade agreement might enhance trade balances and provide stability for the AED. Investment in artificial intelligence also reflects the UAE's commitment to economic diversification, which may bolster the AED's long-term outlook.
Current market data shows the AED to SAR rate is trading near 60-day highs at approximately 1.0221, close to its three-month average and within a stable range between 1.0184 and 1.0230. This stability suggests a balancing act in the currency pair, reflecting both local economic conditions and broader market influences.
Overall, currency forecasts suggest that while the AED may face immediate pressures from geopolitical developments and slower non-oil sector growth, its long-term trajectory could benefit from robust economic growth and strategic investments. Businesses and travelers should remain vigilant and informed about these dynamics to manage their currency exposure effectively.