UAE eyes currency support from U.S. if war disruptions deepen

The UAE is making contingency plans for deeper financial disruptions from war with Iran and asking the U.S. for help.

UAE Central Bank Governor Khaled Mohamed Balama has discussed the possibility of receiving various forms of financial backing in meetings with U.S. Treasury Secretary Scott Bessent and Federal Reserve officials in Washington, The Wall Street Journal reports.

A key option under consideration is a dollar swap line – an arrangement that would allow the UAE to access large amounts of U.S. dollars from the Federal Reserve in exchange for its own currency, helping ensure banks and businesses can keep operating if dollar funding tightens.

The concern is that continued attacks on shipping through the Strait of Hormuz could sharply reduce oil revenues and limit the flow of dollars into the UAE, putting pressure on the dirham, which is pegged to the U.S. currency, and raising the risk of capital outflows.

While no formal request has been made, the talks highlight growing unease in Abu Dhabi that a prolonged conflict could disrupt trade and finance, push some transactions toward alternative currencies such as the Chinese yuan, and force the UAE to rely on U.S. backing to stabilize its economy.