China And Saudi Arabia Ink $7B Currency Swap Deal Amid Global De-Dollarization Trend

China and Saudi Arabia have agreed on a currency swap deal worth approximately $7 billion. This agreement signifies another move in the worldwide trend of de-dollarization, as nations shift from the US dollar.

The three-year deal allows for a maximum of 50 billion yuan or 26 billion riyals, Business Insider reported.

Despite its modest size, the deal carries significant symbolic weight. Saudi Arabia is the world’s leading oil exporter, with most global oil trades conducted in dollars.

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In 2022, China imported $65 billion worth of Saudi crude oil, accounting for roughly 83% of the country’s total exports to China, as reported by Reuters.

Why It Matters: China has been actively promoting the internationalization of the yuan in an effort to challenge the dollar’s dominance. Last month, RBC reported that 25% of Russia’s trade with countries other than China was settled with the renminbi.

Additionally, China has entered into other currency swap agreements this year, including with Argentina. The Chinese central bank currently has 29 active swap agreements, exceeding 4 trillion yuan.

China is also encouraging foreign investors to access its markets through the issuance of panda bonds. At the latest Belt and Road Initiative, Chinese banks signed a series of yuan-denominated loans for countries such as Peru and Malaysia.

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