China and Saudi Arabia sign bilateral currency swap agreement to enhance financial cooperation

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21st November 2023 – (Beijing) The People’s Bank of China announced on Monday that it has entered into a bilateral currency swap agreement with the Saudi Central Bank. The agreement, aimed at strengthening financial cooperation between the two nations, signifies an important step towards expanding the use of their respective currencies and facilitating bilateral trade and investment.

According to a statement released on the central bank’s website, the total value of the currency swap agreement is 50 billion yuan (approximately $6.98 billion), which is equivalent to 26 billion Saudi riyals. The agreement has a validity period of three years and can be extended upon mutual consent.

This currency swap arrangement holds significant benefits for both China and Saudi Arabia. By promoting the use of their own currencies in bilateral transactions, the two countries aim to reduce reliance on foreign currencies and enhance the stability of their financial systems. It also enables them to bypass the need for traditional currency exchange mechanisms, thereby facilitating smoother and more efficient trade and investment activities.

The agreement reflects the deepening economic ties between China, the world’s second-largest economy, and Saudi Arabia, a key player in the global oil market. China has been actively seeking to strengthen its financial cooperation with various nations, as part of its broader efforts to internationalize its currency, the yuan, also known as the renminbi. This move aligns with China’s ambition to enhance its role in global finance and trade.