Bessent says ‘many’ allies have asked for currency swaps amid Iran war

Treasury Secretary Scott Bessent revealed on Wednesday that several oil-rich U.S. allies in the Persian Gulf have reached out seeking financial assistance amidst the economic turmoil resulting from the conflict with Iran. This statement from Bessent expands on previous comments made by a White House official to CNBC, indicating that discussions had taken place regarding the establishment of a currency swap line with the United Arab Emirates (UAE), but no formal request had been made.

A currency swap line would offer liquidity in U.S. dollars to the UAE and other Gulf nations, but it also carries political risks. With U.S. consumers already grappling with higher prices for essentials like food and gas due to the war, providing financial assistance to these nations could further impact domestic economic conditions.

Bessent emphasized the importance of swap lines in preserving stability in dollar funding markets and preventing the disorderly sale of U.S. assets. He mentioned that several Gulf allies, as well as some Asian nations, have expressed interest in such arrangements. The closure of the Strait of Hormuz by Iran, coupled with missile attacks on U.S. allies in the region, has significantly impacted the economies of Gulf countries, making financial support crucial.

President Donald Trump expressed willingness to assist the UAE if feasible during an interview on CNBC’s “Squawk Box.” Senator Steve Daines, a member of the Senate Finance and Foreign Relations committees, voiced support for a currency swap with the UAE, aligning with Bessent’s approach.

However, Democrats may seize upon the opportunity presented by a currency swap with wealthy Middle Eastern nations, like the UAE. Senator Chris Van Hollen raised concerns about the cost of the war with Iran and the implications of providing financial aid to the UAE. He also referenced reports on the UAE-U.S. relationship, including investments from UAE government members in the Trump family’s business and the relaxation of restrictions on advanced AI chips.

In conclusion, the request for a currency swap line from Gulf allies underscores the complex economic and geopolitical dynamics at play in the region. As policymakers navigate these challenges, the potential impact on domestic and international economies remains a critical consideration.

— CNBC’s Megan Cassella contributed to this report.