AED/INR Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average and trading within a stable range.
Key drivers:
• Rate gap: The UAE's fixed exchange rate with the US Dollar supports the Dirham’s value compared to the Indian Rupee.
• Risk/commodities: Global oil prices are currently above average, which benefits the UAE's oil revenue and foreign reserves, indirectly supporting the Dirham.
• Macro factor: India's persistent current account deficit exacerbated by a widening trade gap applies downward pressure on the Rupee.
Range:
Expect the AED/INR to hold steady within the recent 3-month range, reflecting limited volatility.
What could change it:
• Upside risk: A significant rise in oil prices could further support the Dirham.
• Downside risk: Increased foreign portfolio investment outflows from India may pressure the Rupee more significantly.