Treasury Chief Confirms Gulf and Asian Nations Seek US Currency Swap Lines Amid Iran Conflict

US Treasury Secretary Scott Bessent revealed on Wednesday that multiple allied nations in the Gulf region and Asia have formally requested currency swap arrangements with the United States to mitigate the economic consequences of the US-Israel conflict with Iran.

Speaking before the Senate Appropriations Committee, Bessent indicated that the United Arab Emirates stands to gain significantly from such an arrangement, which would involve central banks exchanging currencies to inject liquidity into markets during periods of financial instability. President Donald Trump indicated his openness to exploring such measures on Tuesday.

Market Stabilization Focus

Bessent emphasised that currency swap facilities serve a critical function in preserving order within dollar funding markets and preventing disorderly liquidation of US assets during turbulent periods.

"The swap line would benefit both the UAE and the US, and, as I said, numerous other countries, including some of our Asian allies, have also requested them," Bessent stated, though he declined to identify the specific nations involved.

While the Treasury Secretary did not name the requesting countries, he acknowledged that multiple Gulf states and Asian partners had made such appeals.

Precedent and Mechanism

The Treasury previously provided Argentina with a $20 billion currency swap in October to stabilise the nation's peso during its contentious electoral period, ultimately supporting President Javier Milei's political position. That arrangement, backed by the Treasury's $219 billion Exchange Stabilization Fund, was subsequently repaid.

During the COVID-19 pandemic's initial stages, the Federal Reserve established similar swap lines with Brazil, Mexico, South Korea, and Singapore to address emerging market volatility.

Political Opposition and Concerns

Democratic committee members contested Bessent's justification. Senator Chris Van Hollen of Maryland contended that such measures would impose burdens on American households already facing elevated energy and consumer prices due to the conflict.

"We're talking about over a billion dollars a day in taxpayer money, higher gas prices, higher prices overall, and now we understand that the UAE is asking you to provide them a swap line," Van Hollen stated.

Van Hollen also raised concerns regarding potential conflicts of interest, pointing to the Trump family's substantial business dealings with the UAE in recent years, including a $500 million investment by a top UAE government official in World Liberty Financial—a cryptocurrency venture linked to the Trump family—and the deployment of $2 billion worth of UAE-backed stablecoin in investments with Binance, whose founder received a presidential pardon in October.

The senator noted that these transactions occurred alongside US government decisions to relax export controls affecting UAE companies.

Expert Assessment and Approval Prospects

Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, suggested the request may function primarily as a symbolic gesture reflecting UAE commitment to US national security priorities, including artificial intelligence development and defence cooperation. She further noted that such an arrangement would enhance the UAE's aspirations to establish itself as a premier global financial centre.

Bessent dismissed suggestions of improper linkage between Trump family commercial interests and the proposed swap line arrangement.

Approval for currency swap agreements typically requires Federal Reserve Board endorsement, though such authorisation appears unlikely based on current assessments. Nevertheless, the Treasury has previously implemented currency swaps without Federal Reserve approval, as demonstrated by the Argentina precedent.