The United Arab Emirates’ request for a US currency swap akin to Argentina’s has a math problem, experts tell Semafor.
Treasury Secretary Scott Bessent recently endorsed the idea of a financial lifeline amid economic fallout from the war in Iran, telling lawmakers at a Tuesday hearing it “would both benefit the UAE and the US” (and adding that “numerous other countries” have made similar asks).
Though he also referenced the Federal Reserve, the Trump administration cannot force the central bank to approve such a swap, making Treasury (which handled the Argentina swap) the most likely source.
But experts say the UAE’s reserves are far larger than Treasury’s Exchange Stabilization Fund, which would facilitate the swap.
That would make them a better candidate for the Fed facility known as FIMA Repo, Council on Foreign Relations’ Brad Setser told Semafor.
“They maybe were wanting to just, by making an ask, alert Secretary Bessent to the scale of their estimates of the cost of US and Israeli action,” Setser said, adding that a country like Pakistan could be a more logical recipient: “Pakistanis don’t have a lot of reserves; they’re paying more for oil and gas; and they’ve been very helpful strategically to the US.”
Said CFR’s Jon Hillman: The “back-of-the-envelope math is a little challenging.”
Treasury did not comment.