UAE Warns US: May Switch to Yuan for Oil Transactions if Dollar Shortage Occurs

On April 21, the Governor of the Central Bank of the UAE proposed the idea of establishing a currency swap mechanism during meetings with officials from the US Treasury and the Federal Reserve in Washington, D.C. Although the UAE has not yet faced the most severe economic impacts from the Iran conflict, its energy infrastructure has been damaged, and the blockade of the Strait of Hormuz has disrupted oil exports, affecting its dollar-denominated revenues. Reaching a currency swap agreement with the US would provide the UAE Central Bank with a cheap supply of dollars to support the dirham, which is pegged to the dollar, or to supplement foreign exchange reserves in times of liquidity shortages. UAE officials pointed out that it was the US that instigated the conflict with Iran, drawing the UAE into this devastating conflict, and if dollar supplies become tight, they may be forced to use the yuan or other currencies for oil transactions. (Dongxin News Agency)