The exchange rate between the Singapore dollar (SGD) and the UAE Dirham (AED) has recently reflected a stable range, trading near its three-month average at 2.8573. Analysts note that this rate has fluctuated within a modest 2.7% range from 2.8122 to 2.8881, indicating a period of relative steadiness in the currency pair.
Recent assessments suggest that the SGD has maintained strength amid persistent weakness in the US dollar, bolstered by safe-haven demand and higher capital inflows into Asia. However, forecasts indicate that further gains for the SGD may be limited without decisive signals from the Federal Reserve regarding interest rate policy. Economists point to the importance of upcoming US economic data, especially the Consumer Price Index (CPI), which could impact expectations around Fed rate cuts. The Monetary Authority of Singapore (MAS) has been managing the SGD against a basket of currencies and has indicated little tolerance for further appreciation, as it hovers near the upper bound of its policy band.
On the other hand, the AED is influenced by regional geopolitical tensions, notably the military activity involving Israel and Iran, which has led to increased oil prices and market volatility. Analysts note that these factors, coupled with mixed economic signals from the UAE—such as forecasts of 6.2% economic growth in 2025 against a backdrop of slowing non-oil sector growth—may pose challenges to maintaining the AED's value.
With the SGD facing potential limitations on further appreciation and the AED influenced by both geopolitical and economic factors, any shifts in sentiment or data releases could sway the exchange rate dynamics. Forecasters recommend keeping a close eye on both US economic indicators and regional developments that may affect the broader currency landscape. As such, those involved in international transactions should remain vigilant about potential fluctuations in the SGD to AED exchange rate.
