The UAE’s Dirham is one of the global financial market’s most reliable and stable currencies. The country is infamous for its rich economic system; its currency also reflects this strength. Aside from being pegged to the most significant currency worldwide, the U.S. dollar, UAE’s Dirham also feeds off Dubai’s robust economic system, oil sector, thriving businesses, and a flourishing tourism sector. For these reasons, expert traders believe that the Dirham is a profitable asset for anyone investing in the foreign exchange market. If you want to add this currency to your portfolio, here is the Dirham’s potential performance in the coming year.
Recent Economic Overview of UAE
The latest statistics reveal that the UAE’s economic status is estimated to increase by 4% in 2024, driven by the recent exponential increases in the country’s non-oil sector. The UAE’s strongest hold over the years has been its oil sector. However, the government pumped 7.3% less crude oil in the middle of 2023 and has recently announced that it will curb output. Despite these developments, the UAE is progressing in advancing its economy.
The economic development of UAE is the 4th largest in the Middle East, and it presently stands with a gross GDP of $499 billion in 2023. The leading non-oil contributors to the country’s economy presently are real estate, tourism, financial services, business, and trades. Although it has over $1.3 trillion in oil reserves and a sovereign wealth fund, the country is expanding its economy into other sectors like the global trade market, tourism, and financial services.
UAE’s dynamic economy has been in the top export market for massive economies like the U.S., Europe, Asia, and Africa since 2009. This also makes its AED currency a target for forex exchange investments and CFD trading among investors.
How Does Dubai’s Economy Influence the Dirham (AED)?
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The relationship between a country’s economic condition and its currency is often directly proportional. These two have a clear causal relationship because the economy’s strength directly affects the currency’s exchange rate. Inflation, interest rates, and capital flows are economic factors that influence a currency’s exchange rate.
Recent data shows that the inflation rate in Dubai dropped to 3.6% in the first quarter of 2024 and 4.6% in Q4 2022. With current projections, inflation is set to reduce significantly or cease in 2024. The country also exploits its non-oil sectors to boost its GDP.
Amidst its recovery from the pandemic, there is also news that Dubai will be repaying its debt of 29 billion AED before the end of 2023. This repayment combines market and private debts and indicates a solid post-pandemic economic expansion. The country is benefiting from the recovering inflow of tourists, which has improved significantly following recovery from the pandemic.
Real estate is also a factor, and Dubai’s government-related entities (GREs) are contributing to the country’s ongoing economic recovery. Overall, economic conditions are taking a positive outlook, and the Dirham currency is expected to rise in value towards 2024.
AED Price Forecast
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Let’s look at the future price outlook for AED, paired with some of the most significant currencies in the forex market.
AED/USD Future Outlook
USD to AED global conversion data indicates that the currency has declined for the past year. However, the Dirham has a positive outlook for 2024, and predictions suggest a possible 66.698% increase by next year. This means the price could go from 3.672 to 6.6669 AED between now and November 2024. AED/USD is an excellent investment in the coming year.
AED/EUR Future Outlook
Technical analysis indicates that 2024 will be an average of bullish and bearish trends for the AED/EUR currency pair. February and April show possible declines to 3.5545 and 3.5671 AED, respectively. However, September shows possible upward movements of 4.6629 AED. 2024 is predicted to end with EUR to AED at 3.8282 AED to 1 EUR. This prediction is subject to specific economic changes like inflation and the countries’ interest rates.
GBP/AED Future Outlook
The 1-year GBP/AED forecast is 7.3766 AED to 1 GBP, and the currency rate today is 4.661. Data indicates that the currency pair has been in an upward price movement all year. This points towards the possibility of more increases. The prediction of GBP/AED to 7.3766 AED towards next year is an analysis of past market cycles, volume, and rate differences. These past data show impressive performance and are poised to increase in 2024.
What’s More for the Dirham?
UAE had one of the biggest economic standing pre-pandemic. The country’s economy took a significant decline when the pandemic hit. However, reports from BMI research firm state that the region has regained about 90% of its pre-pandemic values. The ongoing rebound in the country’s economy indicates better performances for the Dirham currency come 2024. The UAE is expected to maintain a positive trajectory in its financial sector, especially in the coming year.
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