Treasury SecretaryScott Bessentsaid Wednesday that "many" oil-rich U.S. allies in thePersian Gulfhave requested a financial backstop amid economic turbulence from the war withIran.
Bessent's comments go further thanWhite Houseassertions 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 beendiscussions about the topic.
Such a swap line would provide the UAE or other Gulf nations with liquidity in theU.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 theStrait of Hormuzhas 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.
PresidentDonald Trumpsaid 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.
Source: Drudge Report
