UAE and Türkiye Move Towards Local Currency Trade with Swap Agreement

The United Arab Emirates and Türkiye have taken another step in strengthening their financial and economic partnership by signing a currency swap agreement valued at AED 18 billion, equivalent to around TRY 198 billion. The agreement was signed between the central banks of both countries and is aimed at boosting trade, supporting financial cooperation, and promoting the use of local currencies in bilateral transactions.

The swap deal is designed to provide liquidity in dirhams and lira, which will help facilitate smoother commercial and financial transactions. Alongside the main agreement, two memorandums of understanding were also signed to encourage greater use of the local currencies in cross-border payments and to establish cooperation between the two nations’ payment and messaging systems. These measures are expected to improve financial infrastructure, reduce reliance on third-party currencies, and lower transaction costs.

For Türkiye, which has faced challenges with foreign exchange market pressures in recent years, the arrangement provides a mechanism to stabilize reserves and ease liquidity management. For the UAE, it further cements its role as a key financial hub in the region and opens new avenues for trade and investment flows with a major partner like Türkiye.

Officials from both sides stressed that the agreement reflects a growing emphasis on financial autonomy and regional collaboration. By expanding the use of domestic currencies in trade, both countries aim to strengthen economic resilience and protect against global market volatility.

The UAE and Türkiye have been deepening their ties in recent years, expanding cooperation not only in finance and banking but also in trade, investment, and technology. This currency swap is seen as part of a broader framework of collaboration that aligns with both countries’ long-term strategic goals.