AED/SAR Outlook:
The AED continues to trade near its 90-day lows and sits close to its 3-month average. This suggests a slightly weaker but likely to move sideways outlook, as there is no strong immediate driver impacting the rate.
Key drivers:
- Rate gap: The UAE Central Bank's base rate alignment with the US Federal Reserve supports the Dirham, while the SAR's peg to the US dollar adds stability.
- Risk/commodities: Fluctuations in oil prices can influence the SAR, as Saudi Arabia's economy is heavily reliant on oil revenue.
- One macro factor: The strengthening of remittances due to the weakening of currencies like the Indian Rupee enhances demand for AED among expatriates.
Range:
Expect the AED/SAR to hold within its current range, with minor fluctuations around the established levels.
What could change it:
- Upside risk: A significant rise in oil prices could boost the SAR, enhancing its position against the AED.
- Downside risk: Further weakening of major Asian currencies could diminish demand for the AED from expatriates, pushing the rate lower.
