SGD/AED Outlook:
The SGD/AED rate is slightly positive and likely to move sideways, as it currently trades above its recent average and within the mid-range of its three-month band.
Key drivers:
• Rate gap: The Monetary Authority of Singapore has maintained a supportive policy, while the UAE Central Bank recently reduced the Base Rate, keeping the Dirham stable.
• Risk/commodities: Oil prices are trending lower, which may affect economic performance in both Singapore and the UAE and, in turn, their currencies.
• One macro factor: Singapore's GDP growth remains robust, but the U.S. tariffs on exports could put pressure on the SGD's strength.
Range:
The SGD/AED is likely to drift around current levels as it remains in a stable range, having previously traded between certain limits.
What could change it:
• Upside risk: A significant rebound in oil prices could strengthen both currencies.
• Downside risk: Further U.S. trade actions against Singapore could weaken the SGD.
