The central banks of the UAE and Bahrain have signed a Dh20 billion ($5.4 billion) currency swap agreement to reinforce monetary co-operation and support trade and investment between the two countries.
The agreement was concluded during an online signing ceremony between Abu Dhabi and Manama, the CBUAE announced on Wednesday.
The agreement, which has a duration of five years, was signed by CBUAE Governor Khaled Balama and CBB Governor Khalid Humaidan.
The arrangement enables the two banks to exchange dirhams and Bahraini dinars, and is expected to support liquidity in local currencies and enable cross-border transactions.
“The agreement aims to further strengthen existing financial co-operation between the two nations,” the CBUAE said.
Mr Balama said the agreement highlights the two countries' shared commitment to expanding financial co-operation and strengthening trade and investment ties.
“The agreement demonstrates both sides’ dedication to promoting the use of local currencies and advancing co-operation frameworks between central banks, contributing to enhanced financial stability and the deepening of regional and international partnerships,” he said.
Mr Humaidan hailed the agreement as a significant milestone in the relationship. “It will further enhance co-operation between the two central banks and advance regional financial integration,” he said.
“The agreement is expected to stimulate economic growth and reinforce financial stability in both countries,” he said.
The UAE has been taking steps to protect its financial system amid intensifying regional uncertainty.
In March, the CBUAE introduced a financial resilience package to support lenders as geopolitical tension linked to the Iran war weighed on markets.
The central bank said the measures were designed to ensure continued lending and maintain stability.
“The package includes enhanced access to liquidity, temporary capital buffer relief and greater flexibility … to ensure continued credit flow to businesses and individuals,” it said at the time.
The currency swap agreement with Bahrain complements these efforts, the CBUAE said on Wednesday. It underscores the UAE’s strategy to strengthen regional financial co-operation while bolstering resilience in the face of external shocks.
