The Canadian dollar (CAD) has recently been trading in a narrow range against the UAE dirham (AED), experiencing some upward momentum as it reached 90-day highs near 2.6857, which is 2.0% higher than its three-month average. This performance has been largely influenced by fluctuating oil prices, with the recent oil price at 14-day highs near 62.27, albeit still slightly below its three-month average. Analysts indicate that as Canada is a major oil exporter, any trends in oil prices directly impact the CAD's strength.
As of late 2025, several factors are shaping the CAD's outlook. First, Canada is grappling with trade policy uncertainty, primarily due to tariffs imposed by the U.S. This has led to a retaliatory response from Canada, heightening market volatility and contributing to CAD depreciation. Additionally, the Bank of Canada’s decision to maintain its policy rate at 2.25% contrasts with potential rate cuts by the U.S. Federal Reserve, creating a divergence that may weigh on the CAD.
Furthermore, recent economic indicators have offered mixed signals. A third-quarter GDP growth of 2.6% and a decrease in the unemployment rate to 6.5% in November provide some support for the CAD. However, lower oil prices continue to exert pressure, as oil revenue is crucial for the Canadian economy.
Conversely, the UAE dirham (AED) remains stable amid the UAE Central Bank's interest rate cuts, maintaining its fixed exchange rate against the U.S. dollar. The recent launch of the digital dirham aims to enhance financial stability and bolster the UAE's standing as a global financial hub. According to experts, the AED's stability, even with policy changes, reflects the efficacy of the UAE's exchange rate regime.
Overall, market trends suggest that the CAD/AED exchange rate will be influenced by the interplay of oil prices, North American trade relations, and local economic indicators. For individuals and businesses engaged in international transactions, monitoring these factors may yield opportunities for favorable currency exchanges in the upcoming months.
