AED/VND Outlook:
The AED/VND is slightly positive but likely to move sideways as it trades just below its recent average and within the mid-range of its 3-month performance. Stronger remittance values are giving support to the AED, but the overall position remains stable without a clear bullish trigger.
Key drivers:
- Rate gap: The UAE Central Bank's monetary policy, including a recent rate cut, supports the Dirham against a pressure-affected Vietnamese Đồng.
- Risk/commodities: Oil prices have remained steady, ensuring the Dirham’s position against the VND since the UAE economy is closely linked to oil revenues.
- One macro factor: Vietnam's trade surplus has narrowed significantly, leading to increased demand for foreign currency, impacting the VND's stability.
Range:
The AED/VND is expected to hold within its recent range, showing minimal upward or downward movement.
What could change it:
- Upside risk: An uptick in global oil prices could enhance the Dirham's strength.
- Downside risk: Continued liquidity pressures in Vietnam may further weaken the VND.
