AED/THB Outlook:
Likely to decrease, given the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The UAE Central Bank’s alignment with US Federal Reserve policies offers firm support for the Dirham, while Thailand's monetary strategies are under pressure from external factors.
• Risk/commodities: The recent rise in oil prices could enhance the AED's strength, but current low oil prices may impact the THB negatively, contributing to further depreciation.
• One macro factor: The Bank of Thailand's recent actions to manage currency strength could indicate ongoing volatility for the THB in the face of rising illicit fund flows.
Range:
The AED/THB is likely to drift lower within its recent range, potentially testing the lower end.
What could change it:
• Upside risk: A significant recovery in global oil prices could strengthen the AED relative to the THB.
• Downside risk: Persistent regulatory measures by the Bank of Thailand could further pressure the THB, exacerbating AED weakness.