The UAE's ambassador to the US has mounted a defence of the country's economy after US President Donald Trump appeared to confirm reports that the Gulf state was exploring emergency liquidity options to deal with the fallout of the Iran war .
"The UAE is one of the world's most financially resilient economies," Youssef Al-Otaiba said in a statement posted on social media on Wednesday.
He noted that the UAE has trillions of dollars in investments and reserves, in a bid to calm fears that the country was facing liquidity pressure following the devastating conflict launched by the US and Israel on 28 February.
"Any suggestion that the UAE requires external financial backing misreads the facts," he said.
"The UAE and the United States will continue to prosper together for decades to come, not because one depends on the other for support, but because both benefit from one of the world’s most important economic partnerships."
His comments came after Trump on Tuesday appeared to confirm a report by The Wall Street Journal that Emirati officials had approached his administration regarding possible financial support measures.
Asked by a CNBC anchor whether a currency swap was under consideration, Trump replied: "It is."
"It’s been a good ally of ours … And you know, these are unusual times." The Wall Street Journal reported on Sunday that the UAE central bank governor had asked Federal Reserve and Treasury officials about a possible financial backstop if the conflict pushes the Emirati economy deeper into crisis.
US officials said the UAE had not made a formal request for a swap line and portrayed the discussions as precautionary in the event the country runs short of dollars.
Emirati officials have reportedly warned they may be forced to sell oil in Chinese yuan or other currencies if they face a liquidity squeeze, a move that would further weaken the role of the petrodollar in global energy trade.
Currency swap agreements are typically used between countries to provide emergency liquidity to central and commercial banks during periods of market stress.
The US-Israeli war on Iran has threatened to inflict serious damage on the UAE economy, which has boomed in recent years partly by marketing itself as a secure destination for tourism, finance and global investment.
The UAE bore the brunt of Iran's retaliatory attacks, facing almost half of the estimated 5,800 missiles and drones fired across the Gulf.
Iranian strikes damaged critical energy and industrial infrastructure, while Tehran's closure of the Strait of Hormuz has thrown the UAE's role as a regional trading hub into question.
Despite the disruption, the country appears in little danger of a near-term dollar shortage due to its enormous wealth. The Gulf state is among the largest owners of dollar-denominated assets in the world, including more than $2 trillion in sovereign wealth fund investments, $300 billion in foreign reserves and around $1.5 trillion within its banking system.
"I read these swap-line conversations less as 'we’re about to run out of dollars' and more as ‘we want an insurance policy that markets will believe in instantly," said Andreas Krieg, an associate professor at King’s College London’s School of Security Studies.
They are also a way of putting pressure on Washington without resorting to overt threats, and come at a time when Emirati policymakers are exploring alternatives to the dollar in some of their trading relationships.
"It’s a reminder that the UAE has choices in how it builds its financial safety net, including deepening monetary links with other powers, and that the US should not take dollar alignment for granted," Krieg said.
Any proposed swap line with the UAE is likely to face political hurdles in the US. Officials say such a move may struggle to win approval from the Federal Reserve, which has traditionally extended dollar liquidity only to major advanced economies during global crises.
The Treasury has more recently expanded swap arrangements to other countries, though using US public resources to support a country as wealthy as the UAE would likely trigger political backlash, including among Trump's own base.