Recent analyses regarding the exchange rate between the UAE Dirham (AED) and the Saudi Riyal (SAR) reflect a complex interplay of geopolitical, economic, and market factors. The AED has been influenced by various developments that may shape its trajectory against the SAR.
Geopolitical tensions have escalated in the region, particularly following military actions involving Israel and Iran, leading to heightened market volatility and rising oil prices. Such instability often places pressure on regional currencies, including the AED. Analysts suggest that any prolonged conflict may further impact investor sentiment and economic growth, potentially leading to fluctuations in the AED-SAR exchange rate.
On a more positive note, the Arab Monetary Fund has forecasted a robust economic growth rate of 6.2% for the UAE in 2025, driven by revitalization in tourism, real estate, and international trade. This optimistic outlook could bolster demand for the AED, particularly if these sectors perform well. However, some recent reports indicate challenges within the non-oil private sector, as growth has slowed to its weakest point in nearly four years. This mixed performance may create a cautious sentiment among investors.
Additionally, the UAE’s pursuit of a trade agreement with the U.S. to reduce tariffs on steel and aluminum exports may influence trade balances, which in turn could affect the AED. Meanwhile, significant investments in artificial intelligence signal the UAE's commitment to economic diversification, presenting long-term growth potential.
Current market data indicates that the AED to SAR exchange rate is experiencing stability, currently trading at a 60-day low of approximately 1.0209, within a tight range of 1.0172 to 1.0230. As the Saudi Riyal is pegged to the U.S. dollar at a fixed rate, the SAR is not expected to fluctuate significantly in the short term. Consequently, investors and businesses should stay alert to developments affecting both economies that could precipitate changes in the AED-SAR dynamic.
Overall, while the medium-term outlook for the AED remains positive based on economic forecasts, geopolitical risks and sector performance will play a crucial role in shaping its value against the SAR.