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(Bloomberg) — The United Arab Emirates signaled its currency swap talks with the US were about joining a small club with access to Federal Reserve liquidity lines rather than a need for external financing.
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“It’s under discussion,” Minister of Foreign Trade Thani Al Zeyoudi said at an event in Abu Dhabi on Monday, when asked about a swap facility with the US. “It is an elite matter. It is not about bailing out.”
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While he didn’t mention the Fed or say which officials the UAE is speaking to, he listed the European Central Bank and the monetary authorities of the UK, Japan, Canada and Switzerland. They alone have permanent dollar liquidity swap lines with the Fed, allowing them to tap the US currency for financial institutions in their jurisdictions during times of stress.
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“They are only having it with five countries,” Al Zeyoudi said. Being part of that group would mean that transactions, trade and investments between both nations had reached a significant level, he said.
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The Fed declined to comment to Bloomberg.
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Reports of the UAE discussing a currency swap with the US emerged last month, with President Donald Trump and Treasury Secretary Scott Bessent confirming them.
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Still, officials from the UAE — one of the world’s richest nations, with trillions of dollars of sovereign wealth fund assets — were quick to say the country wasn’t in need of external financing, even taking into account the shock of the Iran war and Tehran’s attacks.
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Yousef Al Otaiba, the UAE’s ambassador to Washington, suggested the talks were more a sign of his nation’s deepening economic ties to the US. Abu Dhabi has pledged to invest $1.4 trillion in America over the next decade, including in energy infrastructure and artificial intelligence data centers.
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A liquidity swap line with the Fed would differ from one provided by the US Treasury. The latter is often given to countries under financial stress or facing balance of payments crises. The Treasury agreed one worth $20 billion with Argentina last year.
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“This is a call for confidence, not a call for help,” Ziad Daoud, chief emerging markets economist for Bloomberg Economics, said of the UAE in a note on April 22. It “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.”
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—With assistance from Jonnelle Marte and Adveith Nair.
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(Updates with Federal Reserve declining to comment.)
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English (US)