RIYADH: The UAE and Bahrain have signed a currency swap agreement worth 20 billion Emirati dirhams ($5.44 billion), aimed at strengthening financial ties and supporting local currency liquidity between the two economies.
The five-year arrangement, agreed between the countries’ respective central banks, allows the exchange of UAE dirhams and Bahraini dinars to facilitate cross-border transactions and enhance monetary cooperation, according to the Emirates News Agency, also known as WAM.
The agreement was signed by Khaled Mohamed Balama, governor of the Central Bank of the UAE, and Khalid Humaidan, governor of the Central Bank of Bahrain.
The agreement adds to a growing network of currency swap arrangements involving Gulf economies. In 2023, the UAE renewed a five-year, 18 billion dirham agreement with China’s central bank to support trade and liquidity. More recently, the UAE and Turkiye signed a separate deal in 2025 worth about $4.9 billion.
Balama emphasized that the agreement reaffirms the UAE’s and Bahrain’s shared commitment to expanding financial and monetary cooperation, as well as strengthening trade and investment ties.
“He added that the agreement demonstrates both sides’ dedication to promoting the use of local currencies and advancing cooperation frameworks between central banks, contributing to enhanced financial stability and the deepening of regional and international partnerships,” the WAM report stated.
Humaidan echoed these sentiments, and described the deal as a significant milestone in the bilateral relationship.
“He added that it will further enhance cooperation between the two central banks and advance regional financial integration, emphasizing that the agreement is expected to stimulate economic growth and reinforce financial stability in both countries,” the WAM report added.
The swap arrangement is expected to further strengthen financial cooperation between the two nations, building on a long history of mutual economic support and coordination.
A currency swap is an agreement between two central banks to exchange currencies, allowing them to access foreign liquidity, usually to support domestic banks.
Source: www.arabnews.com