The central banks of the UAE and Bahrain have signed a five-year currency swap agreement with a nominal value of AED 20 billion (USD 5.5 billion), aimed at promoting the use of local currencies in cross-border trade and investment and reducing dependence on the US dollar for bilateral transactions.
The deal allows Bahrain's banks to access UAE dirhams directly through the Central Bank of the UAE, bypassing market funding volatility. The UAE ranks among Bahrain's top three investors, with cumulative direct investment of AED 16.5 billion representing 10% of total foreign direct inflows to Bahrain through 2024.
The agreement adds to a growing network of UAE currency swap arrangements, following similar deals with Turkey (USD 4.9 billion), China (USD 4.9 billion) and Egypt (USD1.4 billion).
Gulf Economist Staff Writer