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

Treasury Secretary Scott Bessent said Wednesday that “many” oil-rich U.S. allies in the Persian Gulf have requested a financial backstop amid economic turbulence from the war with Iran.

Bessent’s comments go further than White House assertions to CNBC on Tuesday, where an official said the U.S. had not yet been formally asked to establish a currency swap line by the United Arab Emirates, only that there had been discussions about the topic.

Such a swap line would provide the UAE or other Gulf nations with liquidity in the U.S. dollar, but comes loaded with political risk as U.S. consumers weather higher prices from the war for food, gas and other everyday purchases.

“Many of our Gulf allies have requested swap lines,” Bessent said. “Swap lines, whether it’s from the Federal Reserve or the Treasury, are to maintain order in the dollar funding markets and to prevent the sale of the U.S. assets in a disorderly way.”

“The swap line would both benefit the UAE and the U.S., and as I said, numerous other countries, including some of our Asian allies [who] have also requested them,” he said, without specifying which other countries.

Gulf countries, including the UAE, have been hit hard by the war with Iran. Tehran has fired missiles at U.S. allies in the region, damaging economic infrastructure. Iran’s closure of the Strait of Hormuz has also choked oil revenues that are critical to Gulf nations.

A currency swap could also be necessary to ensure the U.S. dollar, which is dominant in nearly all oil exchanges, remains in use.

President Donald Trump said on CNBC’s “Squawk Box” on Tuesday that he would like to assist the UAE if it’s possible.

“If I could help them, I would,” the president said.

Sen. Steve Daines, R-Mont., who serves on both the Senate Finance and Foreign Relations committees, was supportive of a currency swap with the UAE in a Tuesday interview with CNBC.

Daines said he thinks “[Bessent] is moving in that direction, and I support him in that.” 

Democrats, however, are likely to take advantage of the political opening from a currency swap, especially with wealthy nations in the Middle East. The UAE has one of the highest per capita incomes in the world.

Sen. Chris Van Hollen, D-Md., who questioned Bessent on the potential currency swap at the hearing, highlighted the domestic economic circumstances under which a swap would occur.

“The war in Iran has already cost us dearly, Van Hollen said. “In addition to lives lost, we’re talking about over a billion dollars a day in taxpayer money, we’re talking about higher gas prices, higher prices overall, and now we understand that the UAE is asking you to provide them a swap line through the Exchange Stabilization Fund.”

Van Hollen also noted troves of recent reporting on the UAE-U.S. relationship, including reported investments from members of the Gulf nation’s government in the Trump family’s business and the relaxing of protections around advanced artificial intelligence chips.

— CNBC’s Megan Cassella contributed to this report.