The UAE and Bahrain have taken a significant step in deepening their financial partnership, with the two nations’ central banks inking a major bilateral agreement aimed at boosting monetary stability and cross-border trade.
What Was Agreed
The Central Bank of the UAE (CBUAE) and the Central Bank of Bahrain (CBB) signed a Dh20 billion ($5.4 billion) currency swap agreement during an online ceremony between Abu Dhabi and Manama. The five-year deal was signed by CBUAE Governor Khaled Balama and CBB Governor Khalid Humaidan.
How It Works
The arrangement enables the two central banks to exchange dirhams and Bahraini dinars, supporting liquidity in local currencies and facilitating smoother cross-border transactions. By reducing reliance on third-party currencies, the deal directly lowers transaction costs and friction for businesses operating between the two countries.
What the Leaders Said
CBUAE Governor Balama said the agreement demonstrates both sides’ commitment to promoting local currency use and advancing co-operation frameworks between central banks, contributing to enhanced financial stability and the deepening of regional partnerships.
CBB Governor Humaidan described it as a significant milestone, saying the deal would stimulate economic growth and reinforce financial stability in both countries.
Part of a Broader Strategy
This agreement builds on measures the UAE has already been putting in place. In March, the CBUAE introduced a financial resilience package for lenders, including enhanced access to liquidity, temporary capital buffer relief, and greater flexibility to ensure continued credit flow to businesses and individuals. The currency swap with Bahrain complements these efforts as part of the UAE’s broader push to strengthen regional financial co-operation.
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