Bias: Range-bound, as the current level is near the 90-day average and within the mid-range of the last three months.
Key drivers:
• Rate gap: The UAE Dirham's central bank is aligned with US monetary policy, while the Saudi Riyal’s peg to SDRs maintains stability.
• Risk/commodities: Oil prices have recently dipped below average, impacting risk appetite and currency strength in the Gulf region.
• One macro factor: UAE’s credit growth is robust at 14.7% year-on-year, reflecting a strong economic backdrop that supports the Dirham.
Range: The AED/SAR pair is likely to drift within its recent stable range as both currencies maintain their pegs.
What could change it:
• Upside risk: A rebound in oil prices could strengthen both the AED and SAR.
• Downside risk: Any significant changes in US interest rates could affect the Dirham’s stability.