Trump says US mulling UAE currency swap

The US is considering providing a currency swap to the UAE as part of support for its Gulf ally, President Donald Trump said in a television interview.

The UAE central bank informally asked for the swap arrangement, which would enable it to exchange dirhams for dollars should the Iran war cause longer-term economic challenges.

The central bank did not respond to AGBI requests for comment, but when asked in an interview with US television network CNBC whether a currency swap line to the UAE was under consideration, Trump replied, “It is.”  

“It’s been a good country, a good ally of ours,” Trump said. “I’m surprised because they are really rich.

“A year ago I went there and I got them to invest $1 trillion in the United States… they are very good for this country, so if I can help them I would.”

A currency swap line is an agreement between two central banks to exchange currencies. Were the UAE to secure such a facility with the US, the UAE central bank could exchange dirhams for dollars with the Federal Reserve and supply these to the domestic financial system to mitigate potential dollar shortages.

The two parties would swap back the funds at a pre-agreed date, with the UAE also paying interest.

“Any suggestion that the UAE requires external financial backing misreads the facts,” Yousef Al Otaiba, the UAE’s ambassador to the US, said in a statement on social media.

“The UAE and the United States will continue to prosper together for decades to come, not because one depends on the other for support, but because both benefit from one of the world’s most important economic partnerships.”

Establishing a swap line would not necessarily indicate the UAE is running out of dollars but is more of a precautionary measure. The Fed maintains permanent swap lines with the central banks of the eurozone, the UK, Japan, Canada and Switzerland.

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