The EUR to AED exchange rate has recently shown signs of stability, currently trading at 90-day lows near 4.2166. This value is 1.6% below its three-month average of 4.2862, with fluctuations occurring in a relatively narrow range of 4.2166 to 4.3588, reflecting muted activity in the currency markets.
Recent economic indicators point to a stagnation in the Eurozone's growth, with October's manufacturing PMI highlighting a slight contraction in business activity. Analysts suggest that the European Central Bank's (ECB) monetary policy will be a significant driver of the euro's performance. A hawkish stance from ECB President Christine Lagarde could lend support to the euro, while any dovish signals may further weaken it. Geopolitical uncertainties, particularly related to the ongoing Ukraine conflict and its economic implications for Europe, continue to add volatility to the euro.
In contrast, the UAE Dirham (AED) benefits from a positive economic outlook, with the International Monetary Fund projecting a 4.8% GDP growth for the UAE in 2025. Additionally, the recent currency swap agreement between the UAE and Turkey aims to enhance liquidity and stabilize the AED. This favorable macroeconomic backdrop supports confidence in the AED, which remains sensitive to developments in global oil prices.
Oil prices, currently at $64.44, have recently dipped 2.3% below their three-month average. The fluctuation in oil markets, trading within a volatile 15.0% range, underscores the interconnectedness of oil prices and the euro's valuation. Given that oil is a significant driver of economic performance in the UAE, changes in oil prices may indirectly impact AED as well.
Overall, the forthcoming ECB policy decisions and geopolitical developments will be crucial in determining the euro's trajectory against the AED. Both currencies are affected by distinct yet occasionally overlapping factors, making close monitoring essential for businesses and individuals engaged in international transactions.
