The UAE Is Discussing A Dollar Safety Net With The US

The UAE is in talks with the US over a possible financial safety net amid the ongoing Iran war, American officials told The Wall Street Journal (WSJ). 

According to the report, UAE Central Bank Governor Khaled Mohamed Balama raised the idea of a currency-swap line with Treasury Secretary Scott Bessent and Treasury and Federal Reserve officials in meetings in Washington last week.

A currency swap line is an agreement where one central bank lends its currency, usually US dollars, to another in exchange for its local currency, with a commitment to reverse the transaction later. This allows the receiving country to access dollars when needed, typically during periods of financial stress to support liquidity and stabilize its currency. 

In an interview with CNBC, US President Donald Trump said such an arrangement is “under consideration,” while US officials indicated that the UAE has informally explored possible financial support options. 

“It is,” Trump said, when asked if the administration was weighing that plan with the UAE. “It’s been a good country. It’s been a good ally of ours. And, you know, these are unusual times.” 

“I’m surprised, because they are really rich,” Trump added. “A year ago, I went there, and I got them to invest US$1 trillion in the US... They are very good for this country; so, if I can help them, I would.” 

At the same time, UAE officials have pushed back on suggestions that external financing is needed, emphasizing that any discussions are precautionary rather than a response to immediate pressure. The country’s foreign ministry pointed to comments by Yousef Al Otaiba, the UAE’s ambassador to Washington, who underscored the strength of the country’s financial position and its long-standing economic ties with the US. 

“Any suggestion that the UAE requires external financial backing misreads the facts," Al Otaiba said, in a LinkedIn post. "The UAE is one of the world’s most financially resilient economies, underpinned by more than $2 trillion in sovereign investment assets; more than $300 billion in foreign currency reserves held by the UAE's central bank; and a banking sector with approximately $1.5 trillion in deposits... 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."

The discussions come as US officials engage with Gulf countries on potential support measures following the war in Iran, including infrastructure and economic recovery needs. For now, these talks remain informal, with no confirmed agreement or formal request in place.

Pictured in the lead image is US President Donald Trump. Image via Inc.com.