The UAE banking chief has dismissed fears of capital outflows and dollar shortages despite Iran tensions [Getty]
The chairman of the United Arab Emirates banks federation said on Wednesday there were no concerns about increased capital outflows and a dollar shortage amid the Iran war, as the UAE seeks a currency swap arrangement with the United States.
Abdul Aziz Al Ghurair said at a press conference that there was no basis for fears of capital leaving the country.
“On average it is fine, with some money going out and some coming in,” he said, shrugging off questions on capital flight from the UAE, which in recent years has attracted an increasingly diverse pool of investors and high-net-worth individuals, lured by the ease of doing business, convenient time zones, and tax-free status.
His comments will be closely watched by investors assessing their Gulf exposure amid the U.S.-Israeli war on Iran that began on February 28.
The war has disrupted global energy markets and forced some lenders to temporarily close branches in the UAE and other Gulf countries, before a ceasefire was reached last month.
Al Ghurair said the UAE banking sector should post stronger second-quarter results than a year ago, and said he does not expect corporate defaults to increase as a result of the war’s impact.
“I expect Q2 will be better than Q2 2025,” he said, without providing specific guidance on earnings or loan growth.
He also noted that the UAE is not facing a shortage of U.S. dollars.
The UAE has been discussing a currency swap line with the United States, its trade minister said last week, noting the move would allow the oil-rich Gulf country to join an elite group that includes Canada, Japan, the European Union, the United Kingdom and Switzerland.
Currency swap lines between central banks allow each institution to obtain the other’s currency without resorting to foreign exchange markets, reducing transaction costs and exchange-rate risk for cross-border trade and investment.
