UAE–US currency swap talks aim to bolster dirham stability

Dubai: The UAE is reinforcing the strength and stability of the dirham through advanced financial cooperation with the United States. High-level discussions held in Washington have focused on the possibility of establishing currency swap lines between the Central Bank of the UAE and the US Federal Reserve — an arrangement that would allow the UAE to access US dollar liquidity when needed.

According to a 'Wall Street Journal' report, the talks are ongoing. U.S. President Donald Trump said on Tuesday that a US-UAE swap line is under consideration.

U.S. Treasury Secretary Scott Bessent said on Wednesday, according to 'Reuters', that both the UAE and the United States would benefit from such an arrangement. “Swap lines, whether from the Federal Reserve or the Treasury, are designed to maintain order in dollar funding markets and prevent the disorderly sale of US assets,” Bessent said, adding that a swap line would benefit both countries.

Rather than reacting to financial or geopolitical shocks, the UAE is pursuing a forward-looking approach aimed at ensuring reliable access to US dollars. This strategy is intended to protect the national economy from global disruptions and maintain confidence in the country’s monetary system.

Dirham protection: Supports exchange rate stability and helps preserve the purchasing power of residents’ savings.

Immediate liquidity: Allows local banks to access US dollars quickly during periods of global stress.

Global confidence: Positions the UAE among a limited group of countries with direct financial cooperation involving the US Federal Reserve.

Investment attraction: Reinforces investor confidence by signalling a secure and internationally integrated financial environment.

Trade stability: Helps maintain smooth import and export flows, strengthening supply chain resilience.

The UAE’s financial position highlights its readiness for such cooperation. The country holds foreign reserves of around $270 billion, equivalent to approximately one trillion dirhams, and maintains a monetary base coverage ratio of about 119%, reflecting solid financial fundamentals. The proposed swap line would carry no sovereign risk, as it is structured as a temporary liquidity facility rather than a debt instrument.

By advancing these discussions, the UAE aims to reinforce its position as a global financial safe haven — anticipating risks, strengthening resilience, and supporting long-term economic stability.