Currency Swap Line Becomes Key Mechanism as US Responds to Financial Impact of Middle East War

Focus on US-Iran War News

(CNA, Washington, 22nd, Composite Foreign Report) US Treasury Secretary Scott Bessent pointed out today that multiple allies in the Persian Gulf and Asia have requested the establishment of a currency swap line with the United States to cope with the energy shock and ripple effects caused by the Middle East war.

According to a Reuters report, Bessent told US Senators that President Trump mentioned yesterday that he is considering a currency swap proposal with the United Arab Emirates (UAE), which would benefit both the US and the UAE.

Bessent did not specify the countries making the requests, but he stated during a budget hearing of the Senate Appropriations Subcommittee that such mechanisms help stabilize financial markets amidst the turmoil triggered by the Iran war.

He said, "Whether provided by the Federal Reserve (Fed) or the Treasury Department, the purpose of a currency swap facility is to maintain order in dollar funding markets and prevent the disorderly sell-off of US assets. Therefore, this swap arrangement will benefit both the UAE and the US. As I mentioned, multiple countries, including some Asian allies, have also made similar requests."

In October last year, the US Treasury provided a $20 billion currency swap to Argentina to stabilize the peso during volatile elections and strengthen the position of President Javier Milei's party.

Backed by the Treasury's $219 billion Exchange Stabilization Fund, this swap provided a dollar safety net for Argentina's central bank to support the peso against pre-election depreciation. Argentina has now completed repayment.

Bessent also mentioned that, at the request of multiple countries highly dependent on oil transport through the Strait of Hormuz and facing shortage risks, he has extended the sanctions waiver on Russian seaborne oil for 30 days. These requests were made during the spring meetings of the International Monetary Fund (IMF) and the World Bank (WB) last week.

This move reverses his statement last week that he would not extend expiring waivers. Another waiver allowing countries to purchase Iranian oil stranded at sea expired on April 19.

Regarding external estimates that Iran profited over $14 billion from the sanctions waiver, Bessent called it a "myth" but provided no alternative figures.

He noted that the two waiver measures allowed the Treasury to release approximately 250 million barrels of oil stored in tankers into the market, helping to push down oil prices.

Bessent stated, "Without these sanctions waiver measures, oil prices could have risen to $150." (Compiled by Hsu Jui-cheng) 1150423