The United Arab Emirates is currently in negotiations with the United States regarding a potential currency swap agreement, the nation’s trade minister announced Monday.
Speaking at the “Make It In The Emirates” conference in Abu Dhabi, Trade Minister Thani Al Zeyoudi revealed that his country is pursuing inclusion in an exclusive group of nations that maintain such financial arrangements with America.
“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,” Al Zeyoudi stated during the event.
The minister emphasized that joining this select group would reflect the significant economic relationship between the two nations. “Being part of that group means that transactions… trade, investments between both nations reach a level where that swap is highly needed … so it is an elite matter, (it) is not about bailing out,” he explained.
These financial mechanisms enable central banks to directly exchange their respective currencies without using traditional foreign exchange markets, which helps lower transaction fees and minimizes currency fluctuation risks for international business activities.
Currently, the Federal Reserve maintains permanent currency swap agreements with five major financial institutions: Canada’s central bank, Japan’s central bank, the European Central Bank, England’s central bank, and Switzerland’s central bank.
Last month, Treasury Secretary Scott Bessent revealed that multiple allies from Gulf and Asian regions have requested similar currency swap arrangements with the United States to help manage energy market disruptions and other consequences stemming from ongoing Middle Eastern conflicts.
The regional conflict, which began with American and Israeli military actions against Iran on February 28, has effectively blocked the Strait of Hormuz, a crucial shipping route that handles approximately 20% of worldwide oil and natural gas transport, causing petroleum prices to rise.
Al Zeyoudi did not elaborate on specific details regarding the scope, value, or expected timeline for completing a currency swap agreement with the United States.
