After a 48-year relationship solely with the US dollar, Saudi Arabia’s Finance Minister Mohammed Al-Jadaan said the kingdom is open to trade in currencies other than the US dollar. The remarks follow Chinese President Xi Jinping urging Gulf monarchs to accept the yuan for oil, and Riyadh officials said last March that the country would consider accepting the Chinese currency.
Saudi Arabia’s move away from the US dollar signals a changing economic landscape
This week, the global elite gathered in the Swiss alpine city of Davos for the 2023 World Economic Forum, and Saudi Arabia’s Finance Minister Mohammed Al-Jadaan spoke to Bloomberg TV on Tuesday. al jadaan stunned reporters when he said that Saudi Arabia is open to trade in other currencies. “There are no issues to discuss how we set up our trade agreements, whether it is in US dollars, euros or Saudi riyal,” Al-Jadaan said. The Finance Minister added:
I don’t think we are dismissing or dismissing any discussion that helps improve trade around the world.
The statements by the Saudi Arabian Finance Minister have been interpreted as a further step towards de-dollarization. To understand why Al-Jadaan’s comments are significant, one must go back in time. In 1971, the US government and President Richard Nixon ended the gold standard and for the next three years, oil prices skyrocketed. In 1973 and 1974, federal officials and the United States Secretary of the Treasury William Simon visited the monarchs in Riyadh.
At that point, the petrodollar was born when Simon convinced the Saudis to sell oil for US dollars and ordered them to buy Treasuries. In addition to the Saudis, the entire Organization of the Petroleum Exporting Countries (OPEC) followed suit, pricing its oil in US dollars. Many believe this has given the US an unfair advantage and has been the root cause of many of the wars the US has been involved in in recent decades. In more recent times, the hegemony of the US dollar has apparently been threatened.
Rising Saudi tensions with the US
For example, Saudi Arabia has recently been considering joining the BRICS nations, which include Brazil, Russia, India, China, and South Africa. At the China-GCC summit, Chinese President Xi Jinping urged Saudi Arabia to start accepting yuan for barrels of oil. In addition, last March, Saudi Arabia saying I was thinking of accepting Chinese currency for oil. The Wall Street Journal noted that the Saudis were not happy with US President Biden’s dealings with Iran over the country’s nuclear program.
In October 2022, reports further claimed that members of the Saudi government, including Crown Prince Mohammed bin Salman, privately mocked Biden’s sharp mind. Al-Jadaan detailed on Tuesday that Saudi Arabian leaders have a good relationship with China and other nations.
“We enjoy a very strategic relationship with China and we enjoy that same strategic relationship with other nations, including the US, and we want to develop that with Europe and other countries that are willing and able to work with us,” Al-Jadaan commented. . Until now, Saudi Arabia’s statements have been seen as rhetoric, and none of the aforementioned considerations (accepting yuan for oil, joining the BRICS) have materialized.
What do you think Saudi Arabia’s possible move away from the US dollar means for the future of global trade and finance? Let us know your thoughts on this topic in the comments section below.
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