ABU DHABI, May 4 - The United Arab Emirates is discussing a currency swap arrangement with the United States, the UAE's trade minister said on Monday, confirming ongoing conversations but offering no particulars on scope or timing.
Speaking at the "Make It In The Emirates" event in Abu Dhabi, Thani Al Zeyoudi said the discussions form part of a select set of bilateral relationships in which the U.S. maintains such swap policies. "We have this discussion and conversation with many, it’s part of an elite group that the U.S. is having this swap policy with. They are only having it with five countries," he said, adding that inclusion in that group reflects a level of transactional and investment activity between the two nations that would make a swap "highly needed".
Al Zeyoudi stressed that being part of the group is "an elite matter" and not intended as a bailout. He did not give further information on negotiations, including any figures on potential size, or an expected timeline for concluding an agreement.
Currency swap lines between central banks enable each institution to obtain the other's currency without relying on foreign exchange markets. That mechanism reduces transaction costs and curbs exchange-rate risk for cross-border trade and investment, providing a liquidity backstop in the respective currencies.
The U.S. Federal Reserve currently maintains permanent standing central bank swap lines with five major peers: the Bank of Canada, the Bank of Japan, the European Central Bank, the Bank of England and the Swiss National Bank. Inclusion in that list would signal a closer monetary cooperation aimed at smoothing large-scale financial flows.
U.S. Treasury Secretary Scott Bessent said last month that several allies in the Gulf and Asia had requested currency swap lines from the United States to help manage disruptions stemming from energy shocks and other consequences of the conflict in the Middle East.
The regional conflict, which the article reports began with U.S. and Israel strikes on Iran on February 28, has effectively closed the Strait of Hormuz, a crucial maritime chokepoint through which about 20% of global oil and liquefied natural gas shipments pass. That development has contributed to higher oil prices.
Context and implications
The discussions, as described by the trade minister, highlight an interest in strengthening mechanisms that facilitate trade and investment flows between the UAE and the United States. At the same time, officials have left open the size and timeline for any formal swap line, making the near-term impact uncertain.