Last week the US Dollar to Emirates Dirham (USD/AED) exchange rate moved between lows of 3.6726 and highs of 3.6732.
The pairing softened back to 3.6729 on Monday following the publication of mixed US data.
Both the US Existing Homes report and the Dallas Fed Manufacturing Activity gauge fell short of forecasts on Monday.
Existing home sales had been expected to slide by -1.8% on the month in December but they actually dropped by -4.9%.
Meanwhile, the Dallas Fed Manufacturing Activity index plummeted from -4.4 in January to -11.2 in February. An increase to -4.0% had been projected.
However, it wasn’t all bad news for the world’s largest economy as the US Chicago Fed National Activity Index increased from -0.07 in December to 0.13 in January, beating estimates for a reading of 0.05.
The US Dollar edged lower against peers like the Pound and Euro after the reports were published, although declining oil prices did limit the ‘Greenback’s declines against its higher-risk counterparts.
Today’s Emirates Consumer Price Index showed an annual increase of 3.67% in January.
The measure of inflation rose by 0.69% on the month despite decreases in the price of food and soft drinks, textiles, clothing and footwear, medical care, transportation and communications.
Meanwhile, a report published on Monday also listed the Emirate Dirham as one of the 25 most stable currencies in the world, making it an attractive investment option.
The AED’s peg with the US Dollar saw it ranked 24
th
for exchange rate stability in the IMD’s World Competitiveness Centre’s report.
Industry expert TM Lakshmanan stated; ‘The decision to peg is also apt from the view that the UAE has a large proportion of expatriate residents who prefer stable savings and foreign investors in large infrastructure projects who prefer certainty in costs and returns. The policy of the UAE Central Bank has been to prioritise exchange rate stability over price stability. This has contributed to the Dirham being a stable currency.’
The Pound Sterling to Emirates Dirham (GBP/AED) exchange rate advanced to 5.6599 during the European session as the Pound maintained a bullish relationship with the majority of its currency counterparts.
Last week’s impressive UK employment figures continue to lend the Pound support, as do expectations that the Bank of England (BoE) could increase borrowing costs sooner than currently projected if inflation rebounds from its recent beyond 25-year low.
If this week’s UK growth and confidence figures impress, we could see further GBP/AED gains.