AED/ZAR Outlook:
Slightly weaker, but likely to move sideways as the rate is below its recent average and within a mid-range.
Key drivers:
• Rate gap: The UAE Dirham's peg to the US Dollar provides stability compared to the South African Rand, which is influenced by its own monetary policies.
• Risk/commodities: Oil prices are above average, which could support the Rand due to South Africa's export link to energy prices, but recent volatility creates uncertainty.
• One macro factor: The South African government's commitment to reducing the budget deficit has boosted investor confidence, supporting the Rand's strength.
Range:
The AED/ZAR is likely to hold steady or drift slightly within its recent range, reacting to mixed signals from global commodity trends and domestic policies.
What could change it:
• Upside risk: A significant increase in global oil prices could enhance ZAR strength.
• Downside risk: Concerns over South Africa's economic stability could weaken the Rand, putting further pressure on the AED/ZAR rate.
