The current exchange rate for AED to INR stands near recent highs at approximately 24.20, which is just 0.9% above its three-month average of 23.98. The rate has exhibited stability within a narrow 2.2% range, fluctuating between 23.69 and 24.20 over the recent period.
Several recent developments may influence the AED/INR exchange rate. For the UAE, a significant factor is the bilateral currency swap agreement with Turkey, signed on October 2, aimed at enhancing liquidity and facilitating transactions. This agreement underscores the UAE's position in the regional economy and may bolster the dirham's strength in the long run. Additionally, the IMF's positive economic outlook for the UAE, projecting a 4.8% GDP growth for 2025, reflects strong economic resilience, likely supporting the stability of the AED in foreign exchange markets.
Conversely, the Indian rupee (INR) has been under pressure due to market dynamics, including an aggressive intervention by the Reserve Bank of India (RBI) on October 15, where it sold between $3 billion to $5 billion to stabilize the currency against external pressures, particularly from U.S. tariffs and rising gold imports. This intervention prompted a significant rebound for the rupee, marked by a notable shift in market sentiment toward the INR, where the 1-month risk-reversal for the USD/INR pair has turned markedly in favor of the rupee, highlighting increased demand for INR call options.
Heightened U.S.-India trade tensions stemming from substantial tariffs imposed by the U.S. on Indian exports have added to the uncertainty surrounding the rupee. These complicating factors, along with global economic influences such as U.S. Federal Reserve policy, continue to exert downward pressure on the INR.
In summary, the interplay of these regional developments and macroeconomic factors suggests a cautious outlook for the AED to INR exchange rate, as both currencies face distinct challenges and opportunities. Analysts recommend observing these trends closely, as they may provide crucial insights into potential fluctuations in the AED/INR pair moving forward.
