The current market bias for the AED/ZAR exchange rate is bearish.
Key drivers include the interest rate differential, with the South African Reserve Bank recently lowering the repo rate, contrasting with the UAE's stable monetary policy. Economic growth projections for the UAE are strong, expected at 4.9% in 2025, while South Africa's growth is more subdued at about 1.4%. Additionally, the recent decline in oil prices could negatively impact the rand, as South Africa's economy is sensitive to commodity price movements.
The expected near-term trading range for AED/ZAR is wide, reflecting recent market volatility with the exchange rate near 90-day lows. Upside risks could emerge if South Africa implements effective economic policies or if global oil prices rebound. Conversely, a further decline in oil prices or deeper rate cuts by the South African Reserve Bank could reinforce downward pressure on the ZAR, negatively impacting the AED/ZAR rate.