AED/PHP Outlook:
Slightly weaker, but likely to move sideways as the rate is near its recent lows and lacks a clear driver.
Key drivers:
• Rate gap: The UAE Dirham's peg to the US Dollar provides stability, contrasting with the more flexible monetary policy of the Bangko Sentral ng Pilipinas for the Philippine Peso.
• Risk/commodities: Current low oil prices are affecting the UAE’s foreign reserves, putting light downward pressure on the Dirham.
• One macro factor: The Philippine peso is experiencing heightened depreciation due to the Bangko Sentral ng Pilipinas indicating a potential rate cut, allowing for more room for the peso to weaken.
Range:
Expect movements to hold within the recent 3-month range, showing limited volatility between 15.92 and 16.21.
What could change it:
• Upside risk: A sudden rise in global oil prices could strengthen the Dirham, improving its position against the peso.
• Downside risk: Further weakening of the peso due to economic challenges could adversely affect the exchange rate.