Recent analyses indicate that the exchange rate between the AED and SGD has remained stable, currently positioned at 0.3500, near its three-month average. This stability reflects a narrow trading range of just 2.7%, between 0.3462 and 0.3556, suggesting a lack of volatility in the short run.
Market sentiment surrounding the SGD hints at a strong performance influenced by ongoing US dollar weakness. The Singapore dollar has recently been firm, trading around 1.27–1.28 against the USD, marking its highest levels since 2014, owing largely to expectations of potential dovish shifts by the Federal Reserve and geopolitical factors impacting other regions. Analysts suggest that any significant downward movement in the USDSGD pair may be limited unless there are decisive dovish signals from the Fed or a marked deterioration in US economic data. Moderation in growth prospects in Singapore, including downgrades in GDP forecasts and dips in non-oil exports, places a nuanced view on the SGD's trajectory, with potential smoothing operations from the Monetary Authority of Singapore (MAS) should the USD challenge support at these levels.
On the other hand, the UAE Dirham may encounter pressures from both geopolitical tensions and slower economic growth indicators. Following recent military actions in the Middle East that spiked oil prices, markets in the UAE have displayed increased volatility. Although the Arab Monetary Fund's forecast for 6.2% growth in 2025 paints a positive picture for the UAE economy, concerns arise from the weakening performance in the non-oil private sector and upcoming trade negotiations with the US that could alter currency dynamics.
The interplay between these currencies is further complicated by external trade relations. The Singapore dollar benefits from strong trade connections with the US, while the UAE's dependency on oil and its economic diversification efforts remain areas of ongoing scrutiny.
With the AED to SGD exchange rate demonstrating stability, the recent developments in both regions suggest that market participants should monitor key economic indicators closely. Observing how geopolitical events unfold and potential shifts in monetary policies from both the MAS and the UAE authorities will be essential for anticipating future movements in the AED-SGD exchange rate.
