The Canadian dollar (CAD) has faced downward pressure recently, largely influenced by falling oil prices and concerns about Canada's economic performance. As of now, the CAD to UAE dirham (AED) exchange rate is at 90-day lows near 2.6133, which is 1.2% below its three-month average of 2.646. Analysts attribute this decline to a combination of lower oil prices and soft economic indicators, suggesting that a contraction in Canada’s GDP could further weaken the 'loonie.'
The recent note from analysts indicates that the CAD's value is highly correlated with commodity prices, particularly oil. As Canada is one of the world’s largest oil exporters, declining oil prices significantly impact the CAD’s strength. Currently, oil prices have reached 65.07 USD per barrel, which is 1.7% below the three-month average of 66.21, with fluctuations between 60.96 and 70.13 USD amplifying the volatility in the CAD.
Bank of Canada's recent policy decisions, including a rate cut to 2.5% — the lowest in three years — have further discouraged investment, compounding the CAD's weakness. Observers note that future CAD performance will depend heavily on oil market trends and the Bank of Canada's monetary policy response amid ongoing economic risks. The factors leading to the CAD depreciation include not only commodity prices but also geopolitical dynamics, trade negotiations, and overall U.S. economic health, all of which influence investor sentiment toward the CAD.
On the other hand, the UAE dirham (AED) has maintained a relatively stable outlook. Investments in the UAE are buoyed by a positive economic forecast from the International Monetary Fund, projecting a GDP growth of 4.8% for 2025. The recent currency swap agreement between the UAE and Turkey, aimed at enhancing liquidity, also supports the AED’s stability. While the AED has been influenced by a weaker dirham against other currencies—specifically the British pound—it has shown resilience amid global uncertainties.
As the CAD struggles at these lower levels, stakeholders in international transactions should closely monitor oil market developments and the integrity of economic indicators from Canada and the UAE. Future movements in the CAD/AED exchange rate will likely hinge on the interplay of these factors, along with shifts in global market sentiment.
