UAE, Turkey Sign Currency Swap Deal to Boost Financial Cooperation

The Central Bank of the UAE  and the Central Bank of the Republic of Turkey signed a renewed bilateral currency swap agreement and two Memoranda of Understanding (MoUs) aimed at enhancing cross-border financial collaboration.

The currency swap agreement, with a nominal value of AED 18 billion and TRY 198 billion, is designed to strengthen bilateral trade, improve financial market liquidity, and facilitate cross-border financial settlements using local currencies, according to the UAE’s state news agency WAM.

The first MoU establishes a framework to promote the use of local currencies, the UAE dirham and the Turkish lira, in cross-border transactions. The initiative aims to deepen foreign exchange markets, boost trade and remittance flows, and support macroeconomic stability and investment between the two countries.

It also includes provisions to create a local currency settlement corridor, covering both current account and capital account transactions. The MoU highlights plans to enhance data sharing, technical collaboration, and knowledge exchange between the two central banks.

The second MoU focuses on integrating cross-border payment systems, enabling the use of domestic payment cards in both countries while ensuring compliance with regulatory and supervisory frameworks.

A key component of this agreement includes the linking of the UAE’s instant payment platform "Aani" with Turkey’s counterpart system "FAST", aiming to streamline real-time, cross-border transactions for individuals and institutions.

The two countries also agreed to collaborate on the development of central bank digital currencies (CBDCs) for cross-border retail and institutional payments.

In remarks following the signing, Khaled Mohamed Balama, Governor of the UAE Central Bank, emphasized that these agreements reflect a shared commitment to elevating the strategic financial partnership between the UAE and Turkey.

“The use of local currencies in trade and financial transactions will reduce costs and time in settlements, develop deeper FX markets, and strengthen trade and remittance flows,” said Balama.