Recent analysis indicates a complex outlook for the exchange rate between the UAE Dirham (AED) and the Taiwanese Dollar (TWD). Analysts observe that the AED has faced downward pressure, currently trading at 8.0571, which is 5.2% below its three-month average of 8.4961. The volatility of the AED/TWD pair, which has fluctuated in a 14.0% range, reflects broader geopolitical and economic dynamics.
Geopolitical tensions in the Middle East, particularly following Israel's military actions in Iran, have increased oil prices and market volatility, which can indirectly affect the AED. The Arab Monetary Fund projects a robust growth of 6.2% for the UAE economy in 2025, bolstered by factors such as tourism and real estate developments. However, a slowdown in the non-oil sector suggests challenges in diversifying the economy, potentially impacting investor confidence and the strength of the AED.
On the other hand, the TWD is facing its own challenges, including the implications of a 32% tariff imposed by the US on Taiwanese goods amid ongoing trade tensions. This could negatively impact Taiwan's significant technology sector, which is central to its economy. Analysts also point out that the persistent threat of geopolitical tensions with China may further destabilize the TWD.
Overall, forecasts suggest that while the AED benefits from favorable economic projections and ongoing diversification efforts, external pressures from geopolitical tensions and the performance of the non-oil sector may create uncertainty. Conversely, the TWD could be vulnerable to trade fluctuations and geopolitical risks, making the outlook for the AED/TWD exchange rate quite nuanced as market participants navigate these multifaceted challenges.