US Treasury Secretary Bessent reports on swap line requests from Gulf and Asian allies

US Treasury Secretary Scott Bessent has stated that several countries in the Gulf region and Asia have requested currency swap lines from the US to address energy shocks and other economic fallout from the US-Israel war on Iran. During a Senate Appropriations Committee budget hearing, Bessent said that both the US and the UAE would benefit from a proposed swap line, which would allow central banks to exchange currencies to stabilize markets during times of economic uncertainty.

Bessent explained that such facilities would help maintain order in dollar funding markets and prevent the sale of US assets in an orderly way. He also stated that numerous countries, including some Asian allies, have requested swap lines. The US Treasury has previously provided a $20 billion currency swap to Argentina to stabilize its peso during a tumultuous election period.

In response to concerns raised by Democrats on the committee, Bessent denied any linkage between the Trump family’s financial ties with the UAE and the decision to offer a swap line. However, Senator Chris Van Hollen pointed out that President Trump and his family have significant business interests in the UAE, including investments in cryptocurrency ventures.

The proposal for a swap line is currently being considered by the Treasury Department, which has issued currency swaps without Federal Reserve oversight before. The Federal Reserve typically approves such proposals, but it is unclear whether this particular plan would pass its Board of Governors.

Source: Al Jazeera