AED/HKD Outlook:
The outlook for AED/HKD is slightly positive but likely to move sideways, as the rate is above its recent average and near recent highs.
Key drivers:
• Rate gap: The UAE Dirham is well-supported by its peg to the US Dollar, while the Hong Kong Dollar experiences pressure from the Hong Kong Monetary Authority's interventions.
• Risk/commodities: Recent fluctuations in oil prices have helped maintain the UAE's strong foreign reserves, which support the Dirham's stability.
• One macro factor: The UAE's economic diversification efforts are attracting foreign investments, bolstering confidence in the Dirham.
Range:
Expect AED/HKD to hold within its recent 3-month range, maintaining stability at these elevated levels.
What could change it:
• Upside risk: A significant rise in global oil prices could further strengthen the Dirham.
• Downside risk: Increased market volatility impacting Hong Kong's Central Bank actions could weaken the HKD.