- During the 2023 World Economic Forum, Mohammed Al-Jadaan, Finance Minister of Saudi Arabia, declared in an interview with Bloomberg that his country is open to trade in other currencies.
- After 48 years of only dealing with the US dollar, Saudi Arabia is open to trading with other currencies.
- This decision may be part of the nation’s strategy towards de-dollarization and opening up to trade with other nations such as China.
A phrase from Heraclitus, a pre-Socratic Greek philosopher native to Ephesus, Turkey, says that “the only thing that does not change is change” since everything is in constant movement, whether we are in this world or not.
It is so that things that may seem eternal, in reality are not, such as the Berlin Wall, which was active on the inter-German border from August 13, 1961 to November 9, 1989 or the fact that, after 48 years of only having a relationship with the US dollar, Saudi Arabia is open to trading with other currencies.
Saudi Arabia opens to trade in currencies other than the dollar
This week, the World Economic Forum 2023 was held in the city of Davos, an event that focuses on promoting public-private cooperation that integrates the world’s main economic, political and business leaders.
In this space, an unprecedented event took place, since Mohammed Al Jadaan, current finance minister of Saudi Arabia spoke to the specialized media Bloombergand surprised more than one by indicating that your country is open to trade in other currencies.
“There are no problems discussing how we set up our trade agreements, whether in US dollars, euros or Saudi riyals.”Al-Jadaan said, adding “NoI don’t think we are dismissing or dismissing any discussion that helps improve trade around the world.”.
This statement is of the utmost importance, considering the ties between India and the United Arab Emirates as both countries have previously discussed the possibility of starting a trade in rupees and rials as part of efforts to boost economic ties.
In fact, India and the United Arab Emirates had already signed a free trade agreement (FTA) in February last year with this objective.
United States and Saudi Arabia
According to some specialists, such statements could imply that Saudi Arabia is taking another step towards de-dollarization. Recall that in 1971, then-President Richard Nixon ended the gold standard, which resulted in oil prices rising dramatically.
That is why between 1973 and 1974, US officials visited the monarchs in Riyadh, which resulted, after various negotiations, in the appearance of the petrodollarwith which the Saudis could market their oil in dollars, in addition to the fact that the American government forced them to buy Treasury bonds.
This and other factors caused oil to be fixed in US dollars, an event that could be considered an unfair advantage for the United States, and which could be the main engine to carry out several of the US wars with other countries.
However, at present, The hegemony of the US dollar has apparently been threatened, something that Saudi Arabia could take advantage of to stop depending so much on that currency.
Another clear example that saudi arabiawants to diversify and not only have relations with the United States, is that It has considered joining the BRICS nations, which include Russia, Brazil, China, India and South Africa.
Strengthening through other business partners
Similarly, the country is seeking to strengthen its relations with crucial trading partners, such as China.
In this regard, last year, during the visit of President Xi Jinping to Riyadh, Both nations reached an agreement to promote coordination in exploration and energy policy.
During his visit, the Chinese chief executive said that his country would make several efforts to acquire more oil from the Middle East, in addition to indicating its intention to pay for it in yuan.
“We enjoy a very strategic relationship with China and we enjoy that same strategic relationship with other nations, including the United States, and we want to develop it with Europe and other countries that are willing and able to work with us.”Al Jadaan said.
It should be noted that the relationship between Saudi Arabia and the United States is currently at a tense stage, since according to The Wall Street JournalSaudi Arabia is not happy with President Biden’s position on Iran on the nation’s nuclear program.
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