AED/SGD Outlook:
Bearish, as the rate is below its recent average and near the lower end of the 3-month range.
Key drivers:
- Rate gap: The UAE Dirham is supported by a stable peg to the US Dollar, maintaining its value against the Singapore dollar, which has recently adopted a more accommodative monetary policy.
- Risk/commodities: Recent fluctuations in oil prices have pressured the UAE's foreign reserves, potentially impacting the Dirham's strength.
- Economic performance: Singapore's economy has shown resilience with strong growth figures, contributing to a robust performance for the Singapore Dollar.
Range:
The AED/SGD is likely to drift within its recent 3-month range as it currently trades near the lower end.
What could change it:
- Upside risk: A significant increase in global oil prices could bolster the UAE's reserves and support the Dirham.
- Downside risk: Further easing of monetary policy in Singapore could strengthen the SGD, putting added pressure on the AED.