The recent currency market developments and economic indicators are shaping the exchange rate outlook for the Singapore Dollar (SGD) against the UAE Dirham (AED). Analysts have noted that the SGD has shown resilience in recent months, currently trading at 2.8159, just 0.9% below its three-month average of 2.8409. It has exhibited stability within a narrow range of 2.8074 to 2.8786, reflecting the interplay of monetary policies and economic performance.
The Monetary Authority of Singapore (MAS) has made significant adjustments to its monetary policy in response to changing economic conditions. After easing the policy for the second time in 2025 amid global trade uncertainties, the MAS later maintained its stance due to stronger-than-expected economic growth, with GDP expanding by 2.9% year-on-year in Q3. Forecasters expect that the SGD could benefit further if this growth momentum continues, which may support the currency against the AED.
Furthermore, the SGD has been positioned as a quasi-safe haven currency, gaining strength against the US dollar during times of market stress. This trend might enhance demand for the SGD, bolstering its value relative to the AED, especially if global trade tensions persist.
On the other hand, recent developments in the UAE, including a currency swap agreement with Turkey and the UAE central bank's 0.25 percentage point interest rate cut, are influencing the trajectory of the AED. These measures have led to an increase in investor confidence and support for the local economy. The AED has appreciated against several Asian currencies, which could impact remittances and trade flows.
Overall, the balance of strengths between the SGD and AED appears finely poised. Economists suggest that if Singapore's economic growth remains robust and the MAS continues to adopt a stable policy approach, the SGD may strengthen further against the AED. Conversely, sustained confidence in the UAE's monetary actions and economic initiatives could bolster the AED's position. Market watchers will likely focus on these developments as key indicators for future exchange rate movements.
