Bias: Bearish-to-range-bound, as the current AED/VND rate is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The UAE's stable monetary policy aligned with the Federal Reserve contrasts with Vietnam's cautious approach due to recent recommendations from its advisory body.
- Risk/commodities: Oil prices have been volatile recently; a decline could weigh on the AED, while stability in oil may support it against the VND.
- Macro factor: The IMF's recent approval of a revaluation for the Vietnamese Đồng may strengthen its position against foreign currencies, including the AED.
Range: The AED/VND pair is likely to hold within its recent range, with minimal movements expected as it hovers near historical lows.
What could change it:
- Upside risk: A sudden increase in oil prices could bolster the AED against the VND.
- Downside risk: Continued easing by the Federal Reserve could further weaken the AED compared to the VND.