The Saudi Central Bank and its Chinese counterpart, the People’s Bank of China, have announced the signing of a currency swap agreement totaling 50 billion yuan ($6.93 billion or SAR 26 billion).
The agreement, valid for an initial three-year period and subject to extension by mutual consent, marks a milestone in the financial cooperation between Riyadh and Beijing.
This collaboration aims to expand the use of local currencies, bolster trade and investment, and strengthen bilateral relations in areas of mutual interest.
According to a statement by the Saudi Central Bank, the agreement signifies a broader effort to enhance future commodity exchanges between the two nations, thereby increasing the volume of trade and commercial expansion.
Financial analysts view this agreement as a means to fortify the exchange of goods between the two countries, potentially mitigating the economic repercussions felt globally and safeguarding the economies of both nations.
Dr. Mohammed bin Dleim Al-Qahtani, an economics professor at King Faisal University, emphasized the significance of the agreement in mitigating the impact of global economic uncertainties on the economies of both Saudi Arabia and China.
He noted that it will play a role in reducing the effects of globally high interest rates, inflation, and potential risks stemming from the increasing US debt, which has surpassed $30 trillion.
Al-Qahtani pointed out that the agreement is indicative of the strength and resilience of the Saudi economy, highlighting its importance on the global economic map.
According to Al-Qahtani, acceptance by the second-largest economy in the world, China, of the Saudi riyal and its inclusion in the currencies held by the People’s Bank of China, coupled with the substantial amount involved, equivalent to approximately 7% of the Saudi GDP, reinforces confidence in the riyal and the robustness of the Saudi economy.
Moreover, Al-Qahtani anticipated that the agreement would enhance trade facilitation, increase the volume of commodity exchange between the two nations, and facilitate money transfers.
