AED to INR Forecast: Looking Ahead at What Lies in Store for AED’s in 2024

The economic story of the United Arab Emirates (UAE) went through a change before settling on the currency, the UAE dirham. Prior to 1966, the emirates used the Gulf rupee, which was tied to the Indian rupee. When India devalued the Gulf rupee in 1966, most emirates (except Abu Dhabi) adopted the Qatar and Dubai riyals. Abu Dhabi chose to use the dinar. It was in 1973 that the UAE decided to unify its currency and introduce the “UAE dirham”. Abu Dhabi transitioned from using the dinar at an exchange rate of 1 dinar for every 10 dirhams. The establishment of the Central Bank of UAE in 1980 formalized this system. Prior to that, a Currency Board was set up in 1973. Issued the dirhams as a replacement for various currencies. This journey from using Gulf rupees to adopting dirhams represents both progress and unity for the UAE, showcasing their ability to adapt and their financial resilience.

AED to INR Forecast: Factors Contributing to Growth Of AED

The UAE has historically relied on its oil and gas sector for stability, with more than 95% of government revenues coming from this industry. There has been a shift towards diversifying the economy. Currently, non-oil sectors such as finance, shipping, tourism and trade make up around 5% of the GDP. Showcase the country’s diversity. Despite predictions of a slowdown in 2023, these non-oil industries have shown resilience. The government is committed to developing resources and promoting innovation, resulting in an 8.5% increase in private sector employment since 2022. The country is also prioritizing technology-driven growth. Experiencing a job market as a result. It is expected that the tourism sector will make a contribution to the GDP by 2027, accounting for around 12.1%. The UAE continues to attract Foreign Direct Investment (FDI), with expectations of reaching $22 billion by 2023. Initiatives like the Emirates Investment Authority are attracting investors. Positioning the UAE as a top choice for an anticipated $66 billion FDI influx in the Middle East region.

Expected AED to INR exchange rates for the coming 4 months:

December 2023: 22.614
January 2024: 22.693–22.6821
February 2024: 22.7175–22.7064
March 2024: 22.742–22.7309

There are a number of factors that can affect the exchange rate between the AED and INR, including:

• Economic Conditions: The UAE economy gets stronger than that of India, and this leads to the appreciation of AED as compared to the INR.
• Interest Rates: An increase in the UAE’s interest rates will attract foreign investors who will pump funds into the AED market, hence making it strong, and on the flip side, increasing India’s interest rate will strengthen the Indian Rupee (INR).
• Oil Prices: Since high oil prices bolster AED as the main UAE export, while low oil prices tend to undermine it.
• Geopolitical Events: Investors will be seeking for safety in other currencies when there are conflicts in the Middle East, thus making AED become weak.

Measures Taken To Control Inflation

After experiencing a rise in inflation to 4.8% in 2022 due to increased costs in transportation, food and beverages, it is predicted that inflation in the UAE will ease to 3.5% in 2023. Several factors will contribute to this moderation, including subsidies on fuel and price limits on items. It’s worth noting that the Central Bank of UAE (CBUAE) has responded to concerns about inflation by increasing the policy rate by 25 basis points to 5.15% in May 2023, which marks an increase of 340 basis points since April 2022. This decision aims to alleviate pressure while also enhancing investment returns in the insurance sector. The CBUAE intends to align itself with the Federal Reserve’s actions regarding interest rates at present. Despite pressures, the outlook suggests that there is a possibility of US rates increasing in the near future, with any potential rate cut not expected until the first quarter of 2024.

Impact Of Monetary Policy & Interest Rates on AED to INR

On September 21, 2023, in line with the decision of the Federal Reserve to maintain its position, the Central Bank of United Arab Emirates (CBUAE) decided to keep the interest rate for deposits at 5.4%. At the time, the central bank chose to maintain the rate for short-term borrowing from CBUAE through all credit facilities at a level that’s 50 basis points higher than the base rate. It’s worth noting that interest rates in the UAE have shown fluctuations over time, with an average of 1.56% from 2007 to 2023. The highest point was reached in July 2023 at 5.40%, while it hit a low of 0.15% in July 2021, indicating how responsive the country’s monetary policy is to conditions.

Promoting Growth Of AED By Government Initiatives & Foreign Investments

The UAE has become a sought-after destination for investors, especially in sectors unrelated to oil, as the government is actively working towards diversification. Initiatives such as the “Dubai Future Accelerators Program” and “Dubai Blockchain Strategy” demonstrate their dedication to creating opportunities for growth. The UAE’s business regulations, planned infrastructure and thriving innovation ecosystems all contribute to its appeal. Reforms in governance and intellectual property rights further demonstrate their commitment to fostering innovation. The UAE has set goals, with plans like “The Fifty Economic Plan” aiming to transform the economy by 2030 with a focus on entrepreneurship, tourism and international investments. The approved UAE Federal Budget for 2023–2026 prioritizes development projects and social welfare programs. The country’s emphasis on cutting-edge technologies, intelligence and sustainability positions it as a leader in these areas. With its commitment to achieving “net zero” emissions, the UAE presents itself as a hub for energy investors while taking a holistic approach towards economic growth.

Also read: Sending Living expenses and Gift money to Dubai from India

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AED to INR Forecast: Summing Up

To summarize, there are factors that will impact the forecast of the AED over the years. These factors include the situation, fluctuations in oil prices, the strength of the US dollar and changes in UAE government policies. Currently, experts predict that the AED will maintain stability in the following months due to an economy that is increasing oil prices and proactive measures implemented by the government to bolster its currency. It is important for investors to remain vigilant, as the AED forecast may undergo changes over time. It is recommended to monitor these factors mentioned above in order to make decisions regarding potential shifts in the AED direction. moneyHOP offers services that help individuals optimize their strategies in response to changing economic conditions. With our 100% digital presence, industry-best exchange rates and user-friendly interface, we ensure fast and secure foreign remittances. We provide priority customer support to add convenience to your journey.