Bessent Backs Financial Support for Oil-Rich U.A.E.

Key Points:

• Treasury Secretary Scott Bessent expressed support for providing a currency swap to the United Arab Emirates (UAE) to help mitigate economic fallout from the war in Iran, aiming to prevent disorderly sales of U.S. assets and stabilize dollar funding markets.
• The proposed currency swap would involve the U.S. purchasing the UAE dirham to provide dollars for oil sales, potentially benefiting both the UAE and the U.S. by stabilizing foreign exchange markets and protecting American assets globally.
• Senator Chris Van Hollen raised concerns about the proposal, highlighting President Trump’s financial ties to the UAE and criticizing the Iran conflict as costly and detrimental to U.S. security.
• The Treasury Department has precedent for such swaps, having used its $44 billion Exchange Stabilization Fund to support Argentina’s economy last year, though it remains unclear how much support the UAE might require given its currency peg to the dollar and ample reserves despite regional disruptions.