SGD/AED Outlook: The SGD/AED exchange rate is likely to increase, as it is trading above its recent average and near recent highs, supported by Singapore's accommodative monetary policy.
Key drivers:
- Rate gap: The Monetary Authority of Singapore's recent decision to ease monetary policy contrasts with the Central Bank of UAE maintaining steady rates aligned with the US Federal Reserve.
- Risk/commodities: Global oil prices have remained stable, supporting the UAE's economic resilience and keeping the Dirham strong against other currencies.
- One macro factor: Singapore's expected moderation in economic growth, amid trade tensions, may prompt ongoing policy adjustments to support stability.
Range: The SGD/AED is expected to hold within the recent range, with a possibility of testing recent highs as the policy adjustments continue.
What could change it:
- Upside risk: A quicker-than-expected economic recovery in Singapore could strengthen the SGD further.
- Downside risk: Any significant tension in global trade could affect Singapore's economic outlook, potentially weakening the SGD.