UAE and Egypt Renew Dh5 Billion Currency Swap Deal to Boost Bilateral Trade

The UAE and Egypt have officially agreed to renew their Dh5 billion ($1.36 billion) currency swap agreement as part of ongoing efforts to bolster economic development between the two nations. Valid for five years, the refreshed deal is equivalent to 69 billion Egyptian pounds ($1.32 billion) and aims to enhance trade relations and financial co-operation, according to a statement released by the UAE Central Bank on Tuesday.

The agreement was signed in Abu Dhabi by CBUAE governor Khaled Balama and Central Bank of Egypt governor Hassan Abdalla. The two countries initially established a currency swap deal in September 2023 at the exact same value.

A foreign currency swap is a financial agreement to exchange currencies between two parties, involving the swapping of principal and interest payments on a loan made in one currency for a loan of equal value in another. Mr Balama noted that the agreement demonstrates a shared commitment to financial stability and facilitates trade and investment flows between the UAE and Egypt.

"It also marks a significant step forward in our efforts to promote greater use of local currencies in bilateral settlements, in line with international best practices, thereby strengthening the resilience of the financial system in both countries," Mr Balama added.

As the Arab world's second-largest economy, the UAE has taken proactive measures to safeguard its financial system amid regional uncertainty. Currency swaps are a central component of this broader strategy. In April, the Emirates and Bahrain signed a Dh20 billion agreement to reinforce monetary co-operation and support trade and investment. Furthermore, the UAE maintains Dh18 billion swap deals with China, which was renewed in November 2023, and Turkey, which was established in 2022. Reports in May also indicated that the UAE was in negotiations with the US for a similar arrangement.

Additionally, the CBUAE introduced a financial resilience package designed to support lenders, ensure continued lending, and maintain market stability amidst geopolitical tensions linked to the Iran war.

Egypt, the most populous nation in the Arab world, remains a crucial economic partner to the UAE, with bilateral ties expanding significantly in recent years. Data from the UAE Ministry of Foreign Affairs indicates that bilateral trade between the two nations reached approximately $9.7 billion in 2025, representing a nearly 62 per cent year-on-year increase. Egyptian exports more than doubled to $7 billion last year, while imports from the UAE stood at about $2.7 billion. Furthermore, Egypt continues to be a key player in the UAE’s non-oil foreign trade, which rose 13.1 per cent annually in the first half of the year to reach Dh1.937 trillion, according to government data released in July.

Mr Abdalla stated that the renewal of the local currency swap agreement builds upon close co-operation and supports joint efforts to deepen economic ties. He emphasized that the agreement is vital for enhancing financial market resilience in both countries and expressed optimism for broader opportunities in finance and investment to meet mutual economic development goals.