AED/THB Outlook: The outlook for AED/THB is slightly positive, as it is above its recent average and near recent highs without a clear driver.
Key drivers:
• Rate gap: The UAE Central Bank maintains a stable stance, while the Bank of Thailand reduced interest rates to stimulate growth, affecting the THB negatively.
• Risk/commodities: Oil prices are at 90-day highs, which supports the AED given the UAE's significant oil exports, positively impacting its value.
• One macro factor: The UAE's record federal budget reflects strong financial stability, helping to reinforce the Dirham's position.
Range: The AED/THB rate is likely to hold within the recent 3-month range, as it is showing signs of stability.
What could change it:
• Upside risk: Further increases in oil prices could strengthen the AED against the THB.
• Downside risk: If the Thai economy shows unexpected improvement, it could lead to a stronger THB which may pressure the AED.