The United Arab Emirates (UAE), an oil-rich nation, has reportedly asked the United States to establish a currency swap agreement. If realized, it would be the second currency swap deal following last year's $20 billion (approximately 29.5 trillion won) agreement with Argentina. Critics point out that the U.S., which had firmly drawn a line against Korea's currency swap requests, appears to be changing its standards based on its own interests.
According to the Wall Street Journal (WSJ) and other foreign media on the 20th, Khaled Mohamed Balama, Governor of the UAE Central Bank, recently visited Washington and met with U.S. Treasury Secretary Scott Bessent and Federal Reserve (Fed) officials to convey the currency swap proposal. The UAE reportedly made the request on the grounds that it needs to secure dollar liquidity in advance, in preparation for a prolonged U.S.-Iran war.
A currency swap is an agreement allowing two countries to exchange their currencies at a predetermined exchange rate within a specific period. For countries in urgent need of dollars, it serves as a kind of lifeline. The UAE, despite being resource-rich, is moving to secure dollars because the prolonged Iran war has made crude oil and liquefied natural gas (LNG) exports difficult, while signs of foreign investment capital outflow are also emerging. The UAE has reportedly already secured $4 billion (approximately 5.9 trillion won) through private bond issuance. Bahrain, another Middle Eastern country, recently signed a currency swap worth 20 billion dirhams (approximately $5.4 billion) with the UAE, according to local foreign media reports. The International Monetary Fund (IMF) also pointed out the possibility of a rapid dollar crunch, noting that countries in the region could demand up to $50 billion in additional funds. An official in Korea's investment bank (IB) industry explained, "Foreign media are reporting that the UAE pressured the U.S. by suggesting it could expand yuan-denominated settlements if a currency swap isn't established," adding, "Paradoxically, countries with dollar peg systems require more liquidity in crisis situations."
However, whether the U.S. will actually conclude the currency swap remains uncertain. In principle, the final authority over currency swaps lies with the Fed, not the U.S. Treasury, and strict conditions—such as the spread of a global financial crisis or risk of spillback into U.S. financial markets—are required. Within the U.S. Congress, potential checks regarding the nature of financial support may also serve as a variable. Even if support is provided, observers suggest it could take the form of separate liquidity support through the U.S. Treasury rather than going through the Fed, as in last year's Argentina currency swap case.
Experts point out that Korea should also seize this opportunity to strongly request another currency swap agreement with the U.S. During last year's Korea-U.S. tariff negotiations, Korea strongly requested an unlimited currency swap, but the U.S. ultimately refused.
However, considering that Japan—whose economy is larger than Korea's—has established an unlimited dollar exchange agreement with the U.S. and built a solid exchange rate buffer, many analysts argue that Korea, which is about to make massive investments in the U.S., also needs similar safeguards.
Kim Jin-il, professor of economics at Korea University, emphasized, "Even if the situation arises where the Fed enters into package-type currency swaps with other countries, it is important for Korea to build the response capacity to enter negotiations even one day earlier than other countries."
Attention is also expected to focus once again on the role of Shin Hyun-song, nominee for Bank of Korea Governor, who worked at the Bank for International Settlements (BIS)—known as the "central bank of central banks" worldwide. The National Assembly's Finance and Economy Committee adopted the confirmation hearing report on nominee Shin on that day with bipartisan agreement, and President Lee Jae-myung approved it. Nominee Shin is scheduled to begin his term on the 21st.
Nominee Shin is expected to demonstrate policy response capabilities based on his international experience, including serving as Head of the BIS Monetary and Economic Department, and his global network. In particular, given that he has direct communication channels with key figures at major central banks, such as Fed governors, market attention is naturally shifting to the new governor's early diplomatic and policy moves.
