AED/TWD Outlook:
Slightly weaker, but likely to move sideways as the rate is below its recent average and near its lows.
Key drivers:
- Rate gap: The UAE Dirham is effectively pegged to the US Dollar, while the New Taiwan Dollar is subject to market forces, contributing to a persistent gap in stability.
- Risk/commodities: Recent fluctuations in global oil prices are influential, as the UAE's oil revenue impacts the Dirham's value, affecting its position against the TWD.
- One macro factor: Ongoing volatility in the TWD, driven by export pressures and strong capital inflows from trade optimism, poses challenges for currency stability.
Range:
The AED/TWD pair is expected to hold within its recent range, reflecting a stable yet cautious outlook.
What could change it:
- Upside risk: A significant rise in global oil prices could strengthen the Dirham, supporting its value against the TWD.
- Downside risk: Further weakness in Taiwan's export sector could lead to increased volatility for the TWD, negatively impacting the pair's dynamics.