Recent developments impacting the AED to SAR exchange rate have led analysts to adopt a cautious outlook. The UAE Dirham (AED) is influenced by various factors, including geopolitical tensions that emerged following Israel's military strikes on Iran, which sparked increased oil prices and intensified market volatility. Such unrest in the Middle East could place downward pressure on the AED in the short term, particularly if investor sentiment shifts negatively.
Economic growth forecasts paint a more optimistic picture for the UAE economy, with the Arab Monetary Fund projecting a robust 6.2% growth in 2025, driven by gains in tourism, real estate, and international trade. This expansion could bolster confidence in the AED. However, analysts note that the non-oil sector, which is crucial for diversification, has shown signs of slowdown. The recent drop in non-oil private sector growth to its weakest in nearly four years may add complexity to the economic outlook and could influence AED stability.
Moreover, the UAE's attempts to negotiate U.S. trade agreements to alleviate tariffs could have implications for trade balances and the currency's performance. Investment in artificial intelligence and technology also indicates a long-term strategy for economic diversification that may support the AED against the Saudi Riyal (SAR).
Currently, the AED to SAR exchange rate is near 90-day lows at approximately 1.0209, tracking closely to its three-month average. Market performance has seen the pair trade within a relatively stable range of 0.2%, oscillating between 1.0209 and 1.0230. Given the riyal's firm peg to the U.S. dollar, this stability in the AED may reflect a broader trend in regional currencies as they navigate the potential impacts of geopolitical uncertainties and economic fluctuations.
In summary, while growth forecasts suggest resilience for the UAE economy, analysts remain vigilant regarding external pressures that could affect the AED's value against the SAR, particularly in light of current geopolitical realities and non-oil sector performance indicators.