UAE, Turkey sign Dh18 billion currency swap agreement to boost trade

Dubai: The Central Bank of the UAE (CBUAE) and Turkey’s central bank (CBRT) have signed a bilateral currency swap agreement between the UAE dirham (AED) and the Turkish lira (TRY), along with two memorandums of understanding aimed at strengthening financial cooperation and promoting the use of both currencies in cross-border trade.

The swap’s nominal size is Dh18 billion and TRY 198 billion. The agreement is intended to provide local currency liquidity to both financial markets and support more efficient settlement of cross-border commercial and financial transactions.

Under the first MoU, the two central banks will work to expand the use of AED and TRY in both current and capital account transactions, deepen foreign exchange markets, facilitate remittances, and coordinate more closely on cross-border trade and investment.

The second MoU covers cooperation on payments systems, including linking the UAE’s instant payments platform (Aani) with Turkey’s FAST system and integrating messaging, switches and regulatory oversight. It also encourages coordination on issuance and regulation of central bank digital currencies (CBDCs).

The deal is part of a broader trend among Gulf countries to reduce dependence on hard currencies, manage foreign exchange risk and deepen regional economic ties. Analysts say the swap and related agreements may reduce transactional friction for businesses and traders operating between the UAE and Turkey, while giving both central banks tools to manage currency volatility more proactively.

This agreement follows similar swaps and local currency trade pacts in the region, as countries seek to insulate trade flows from dollar volatility.