Currency Swap: China-Saudi $6.9B Deal

As their cooperation grows, the People’s Bank of China and the Saudi Central Bank, also known as SAMA, have inked a local currency swap agreement valued at SR26 billion ($6.93 billion).

The three-year deal “has been established in the context of financial cooperation between the People’s Bank of China and the Saudi Central Bank,” according to SAMA.

A different press statement from China’s central bank made clear that the swap agreement might be extended past its three-year term with mutual consent.

The bank also mentioned how the new agreement will support trade and investment between Saudi Arabia and China, encourage the use of local currencies, and enhance financial cooperation between the two nations.

Financial contracts known as currency swap agreements allow two countries to exchange a fixed amount of one currency for an equivalent amount in another.

One of the biggest oil exporters in the world, the Kingdom has recently improved trade ties with China in areas other than hydrocarbons.

China is the Kingdom’s main trading partner, with exports to the Asian giant reaching SR13.7 billion ($51.3 billion), according to a report released by the General Authority for Statistics in August.

In the same month, the Kingdom’s imports from China totaled SR11.8 billion.

A memorandum of understanding to share expertise in contemporary transport systems, such as high-tech techniques to improve roads, construct autonomous vehicles, and enhance shipping and port operations, was signed by Saudi Arabia and China in September.

China officially granted Saudi Arabia Approved Destination Status in the same month, enabling Chinese nationals to visit the Kingdom on group tours and bolstering bilateral tourism ties.

In October, China’s National Press and Publishing Administration and Saudi Arabia’s Literature, Publishing, and Translation Commission partnered to promote literary translation; the agreement is expected to increase connectivity between countries and open up opportunities in the tourism sector.

Both countries will cooperate to develop literary cooperation, improve content exchange, and deepen cultural ties as a result of this agreement.

Trade Boost: China, Saudi’s Billions

The $6.9 billion currency swap agreement between China and Saudi Arabia marks a significant step in their growing financial cooperation. Facilitated by the People’s Bank of China and the Saudi Central Bank, the three-year deal aims to bolster trade and investment, encourage the use of local currencies, and enhance overall financial collaboration. As two major players in global trade, the agreement reflects the deepening ties beyond hydrocarbons. With China as Saudi Arabia’s primary trading partner, this move is part of a broader trend, including shared expertise in transport systems and initiatives promoting tourism, literature, and cultural exchange between the two nations.

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