ABU DHABI, May 4 (Reuters) – The United Arab Emirates is discussing a currency swap line with the United States, its trade minister said on Monday.
“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,” Thani Al Zeyoudi said at a conference in Abu Dhabi.
“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 told the “Make It In The Emirates” event.
Currency swap lines between central banks allow each institution to obtain the other’s currency without resorting to foreign exchange markets, reducing transaction costs and exchange-rate risk for cross-border trade and investment.
The U.S. Federal Reserve has permanent standing central bank currency swap lines with five other major central banks – the Bank of Canada, the Bank of Japan, the European Central Bank, the Bank of England and the Swiss National Bank.
U.S. Treasury Secretary Scott Bessent said last month that a number of allies in the Gulf region and in Asia had requested currency swap lines from the United States to help deal with energy shocks and other fallout from the Middle East war.
The war, which started with U.S. and Israel strikes on Iran on February 28, has effectively shut the Strait of Hormuz, a vital chokepoint through which about 20% of global oil and liquefied natural gas shipments pass, raising oil prices.
Al Zeyoudi did not provide further details on the discussions, size or timeline for an agreement on the currency swap line with the United States.