Saudi Arabia and China deal blow to US Dollar with Currency Swap

Riyadh/Beijing: Saudi Arabia and China have signed a currency swap agreement worth 50 billion yuan. According to sources, this agreement was signed between the two central banks, ‘Central Bank of Saudi Arabia’ and ‘The People’s Bank of China’. Earlier this year, Saudi Arabia had hinted at using currencies other than the US dollar for fuel trade. At the same time, agreements worth $10 billion were made in the ‘Arab-China Business Conference’ held in June.

Saudi Arabia is the world’s largest crude oil exporter. At the same time, China is said to be the world’s largest crude oil importer. In the year 2022, China imported crude oil worth $65 billion from Saudi Arabia. Oil accounts for more than 80 percent of Saudi Arabia’s total exports to China.

Last year, Chinese President Xi Jinping visited the Gulf countries. During this, he had hinted at conducting oil trade with Arab countries through Yuan in future. ‘China will continue to import large quantities of oil from the Gulf countries. The trade of natural gas will also be increased. China will use Shanghai Petroleum and Natural Gas Exchange as a platform for this business. Yuan will be used for the trade of oil and natural gas through this medium,’ Xi Jinping had said.

In the last two years, China has increased its investment in Gulf countries along with Saudi Arabia. In the year 2022, China had signed 35 agreements with Saudi Arabia worth $30 billion. The Biden administration of the US had ignored China’s investments in Saudi Arabia. At the same time, sharp differences had developed in the relations between the US and Saudi Arabia. A combination of issues, including the military intervention in Yemen, the Jamal Khashoggi murder case, and concerns over Iran’s nuclear program contributed to this.

China took advantage of the differences between the US and Saudi and strengthened relations with Saudi Arabia and other Gulf countries. Due to the mistakes of the Biden administration, the US has lost the trust of the friendly Gulf countries, prompting criticism even within the US. This currency swap agreement between the two countries is for three years and includes China’s Yuan and Saudi Arabia’s Riyal.

In the last few years, China has started making vigorous efforts to make the Yuan an international reserve currency. China has made currency agreements with about 40 countries to increase the share of the Yuan. China’s Yuan currently ranks fifth among reserve currencies in the international economy. Yuan, which has become the third largest currency in merchant trade, has also gained a seven percent share in foreign trade.

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