The exchange rate for AED to CAD has recently reached 90-day highs at approximately 0.3827, which is 1.2% above its three-month average of 0.378. This stability highlights the dirham's resilience, despite fluctuations in global economic conditions. As analysts point out, the CAD's susceptibility to oil prices, being a major oil-exporting country, plays a crucial role in its valuation against the AED.
The Canadian dollar has faced downward pressure due to recent declines in oil prices, which have dropped to USD 65.07—1.7% below its three-month average of 66.21, amid oversupply concerns and U.S.-China trade tensions. Analysts note that these factors negatively impact the CAD, as oil price reductions weaken Canada's economy and, in turn, its currency value. The loonie's depreciation is further exacerbated by economic pressures indicated by recent GDP figures suggesting a contraction in Canada's economy in September.
In addition, the Bank of Canada's recent interest rate cut to 2.5%, the lowest in three years, has made the CAD less attractive to investors, as lower rates can deter foreign capital. The federal discourse around potential future U.S. interest rate cuts has provided some stabilization for the CAD, but uncertainties in trade negotiations, particularly with the U.S., remain a challenge.
On the other hand, the UAE Dirham benefits from a significant currency swap agreement with Turkey, enhancing liquidity and financial transaction efficiency, which may bolster the dirham's strength. Furthermore, the IMF's positive outlook on the UAE economy, forecasting a 4.8% GDP growth in 2025, reassures confidence in the AED.
Overall, the future trajectory of the AED to CAD exchange rate will hinge on developments in oil prices and economic data from both Canada and the UAE. With the ongoing volatility in oil markets and economic indicators signaling caution, traders and businesses engaging in international transactions should stay alert to these evolving dynamics.
