The United Arab Emirates is mulling a currency swap line with the United States. This discussion forms part of an elite group that the US has this policy with – only five countries are included.
Thani Al Zeyoudi, UAE’s trade minister, made these remarks at a conference in Abu Dhabi. He explained that being part of this elite group means transactions between both nations reach a level where such a swap is highly needed and it’s not about bailing out.
Currency swap lines allow central banks to obtain each other’s currency without foreign exchange market intervention, reducing transaction costs and exchange-rate risk for cross-border trade and investment. The US Federal Reserve has permanent standing central bank currency swap lines with five major central banks – the Bank of Canada, the Bank of Japan, the European Central Bank, the Bank of England, and the Swiss National Bank.
US Treasury Secretary Scott Bessent recently said several allies in the Gulf region and Asia had requested such a line from the US to deal with energy shocks and fallout from the Middle East war. The conflict began on February 28 with US and Israel strikes on Iran, effectively shutting the Strait of Hormuz – a vital chokepoint for about 20% of global oil and liquefied natural gas shipments.
Al Zeyoudi did not provide further details on the discussions or any agreement timeline.