US President Donald Trump said a currency swap with the United Arab Emirates is under consideration, as the Gulf state floats the prospect of financial assistance to weather the fallout from the Iran war.
“It is,” Trump said Tuesday on CNBC when asked if the administration was weighing that plan. “It’s been a good country. It’s been a good ally of ours. And, you know, these are unusual times.”
The UAE, an ally of Washington’s, has informally inquired about potential financial lifelines, including a currency swap, if the economic and financial impact of the war worsens, according to several people familiar with the matter, who asked not to be named discussing sensitive matters. The UAE, which has trillions of dollars-worth of sovereign wealth fund assets, has no dollar liquidity problems, the people added.
In the case of a US-UAE swap, the Federal Reserve would likely lend dollars to the UAE central bank, holding dirhams in return, with the transaction reversing in the future.
The conflict began in late February when the US and Israel bombed Iran, which retaliated by striking the UAE, other Gulf Arab states and Israel with thousands of missiles and drones. Iran’s attacks also closed off the Strait of Hormuz, choking the flow of oil and liquefied natural gas. The US and Iran began a ceasefire two weeks ago and are discussing a deal to end the war.
“I’m surprised, because they are really rich,” Trump said. “They’re very good for this country, so yeah, if I could help them, I would.”
The UAE’s foreign ministry didn’t immediately respond to a request for comment about Trump’s remarks.
National Economic Council Director Kevin Hassett indicated Monday that the US was open to helping the UAE but did not think it would be necessary.
Similar moves have been floated before. Last fall, the US inked an economic stabilization agreement in a bid to boost the Argentine peso ahead of a midterm election in the country that was crucial for Argentine President Javier Milei, a Trump ally.
“This is a call for confidence, not a call for help,” said Ziad Daoud, chief emerging markets economist for Bloomberg Economics. “The UAE wants to join the club of central banks — like the UK, Japan, and Europe — that hold standing swap lines with the Fed. Status matters more than dollars.”
The Wall Street Journal first reported that the UAE had asked the US about a currency swap.
Written by: Josh Wingrove, Ben Bartenstein, and Dinesh Nair @Bloomberg
The post “Trump Says Currency Swap With UAE Is Under Consideration” first appeared on Bloomberg