Bias: Bearish-to-range-bound, as the current level is below the 90-day average and sits in the lower half of the 3-month range.
Key drivers:
• Rate gap: The persistence of the UAE's higher interest rate compared to Thailand's recent cuts is helping to support the AED.
• Risk/commodities: Oil prices are currently above average, which benefits the AED as the UAE is an oil exporter, while the appreciation of the THB against regional currencies is adding pressure.
• Economic growth projections: Thailand's sluggish economic growth forecasts suggest that the BOT will likely maintain accommodating policies, which could limit THB's gains.
Range: The AED/THB pair is likely to drift within the stable range seen over the past three months.
What could change it:
• Upside risk: A surprise shift towards stronger economic indicators in Thailand could boost the THB against the AED.
• Downside risk: A decline in oil prices could weaken the AED, potentially pushing the pair lower.