UAE Seeks Financial Backing from US to Counter Dollar Shortage, May Use Yuan for Oil
The United Arab Emirates (UAE) is negotiating with the United States to establish a financial support mechanism in anticipation of potential economic crises stemming from the Iran war. The UAE has also indicated that it may resort to using the Chinese Yuan for oil transactions if dollar shortages arise.
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- 📰 Published: April 20, 2026 at 13:32
- 🔍 Collected: April 20, 2026 at 14:01 (29 min after Published)
- 🤖 AI Analyzed: April 20, 2026 at 16:17 (2h 15m after Collected)
WASHINGTON (CNA, Reuters) - Officials stated that the United Arab Emirates has begun negotiations with the United States to seek a financial support mechanism to guard against deeper crises that the Iran war could push the UAE into. The UAE also indicated that if dollar shortages occur, it might switch to using the Chinese Yuan for oil transactions.
According to The Wall Street Journal, officials revealed that the Governor of the Central Bank of the UAE, Khaled Mohamed Balama, proposed the idea of establishing a currency swap mechanism during his meetings last week in Washington with US Treasury Secretary Scott Bessent and Federal Reserve officials.
Officials said the UAE side emphasized that although they have so far avoided the most severe economic impacts of the conflict, they might still require financial assistance as a backup in the future.
These discussions highlight the UAE's concerns about the potential for the war to significantly impact its economy and its status as a global financial hub, not only depleting foreign exchange reserves but also deterring investors who view it as a stable and secure investment destination.
The ongoing conflict has already severely damaged the UAE's oil and gas infrastructure and prevented it from selling oil via tankers transiting the Strait of Hormuz, resulting in the loss of crucial dollar revenue.
UAE officials have not yet formally submitted a request for the currency swap mechanism. If established, the UAE Central Bank would be able to obtain dollars at low cost during a liquidity crisis to support its national currency or bolster foreign exchange reserves.
US officials stated that during recent talks with the US side, the UAE described this proposal as a preliminary and precautionary concept.
However, some officials indicated that the UAE side also argued that it was President Trump's decision to attack Iran that dragged the UAE into this destructive conflict, and that the related impacts may not have ended.
UAE officials also informed US officials that if dollar supplies become scarce, the UAE might be forced to settle oil sales and other transactions in Chinese Yuan or other foreign currencies.
Such a scenario poses an implicit threat to the US dollar. The dollar's dominant position among global currencies is partly due to its near-monopolistic status in oil trading. (Compiled by Chen Yu-ting) 1150420
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According to The Wall Street Journal, officials revealed that the Governor of the Central Bank of the UAE, Khaled Mohamed Balama, proposed the idea of establishing a currency swap mechanism during his meetings last week in Washington with US Treasury Secretary Scott Bessent and Federal Reserve officials.
Officials said the UAE side emphasized that although they have so far avoided the most severe economic impacts of the conflict, they might still require financial assistance as a backup in the future.
These discussions highlight the UAE's concerns about the potential for the war to significantly impact its economy and its status as a global financial hub, not only depleting foreign exchange reserves but also deterring investors who view it as a stable and secure investment destination.
The ongoing conflict has already severely damaged the UAE's oil and gas infrastructure and prevented it from selling oil via tankers transiting the Strait of Hormuz, resulting in the loss of crucial dollar revenue.
UAE officials have not yet formally submitted a request for the currency swap mechanism. If established, the UAE Central Bank would be able to obtain dollars at low cost during a liquidity crisis to support its national currency or bolster foreign exchange reserves.
US officials stated that during recent talks with the US side, the UAE described this proposal as a preliminary and precautionary concept.
However, some officials indicated that the UAE side also argued that it was President Trump's decision to attack Iran that dragged the UAE into this destructive conflict, and that the related impacts may not have ended.
UAE officials also informed US officials that if dollar supplies become scarce, the UAE might be forced to settle oil sales and other transactions in Chinese Yuan or other foreign currencies.
Such a scenario poses an implicit threat to the US dollar. The dollar's dominant position among global currencies is partly due to its near-monopolistic status in oil trading. (Compiled by Chen Yu-ting) 1150420
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