Home » Companies » The Saudi Central Bank SAMA and China’s Central Bank Sign  .93 Billion Currency Swap
The Saudi Central Bank SAMA and China’s Central Bank Sign  $6.93 Billion Currency Swap
The Saudi Central Bank and China_s Central Bank Signed a $693 Billion Currency Swap

The Saudi Central Bank (SAMA) and the People’s Bank of China have signed a 3 Year year currency swap agreement worth $6.9 Billion to promote financial cooperation and trade. This agreement aims to enhance financial relations between the two countries and promote the use of local currencies. 

The agreement is also expected to boost opportunities in the tourism sector between the two countries

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A New Chapter 

The agreement is the latest chapter in strengthening relations between Saudi Arabia and China. As the world’s leading oil exporter and the largest consumer of energy, respectively, the two countries have a long history of economic cooperation. 

However, their relationship has been expanding beyond the realm of hydrocarbons into areas such as security and technology.

The Details 

Image Credit SAMA

The currency swap agreement, valued at $6.9 Billion or SAR26 billion, will be valid for three years. However, the deal can be extended by mutual agreement. 

The agreement aims to strengthen financial cooperation, facilitate the broader use of local currencies, and stimulate trade and investment between Riyadh and Beijing.

Positive Impacts

Image Credit Getty Images

This agreement is expected to impact trade and investment between the two countries significantly. In 2022, China imported $65 billion worth of Saudi crude. This accounted for about 83% of the Kingdom’s exports to China. The agreement could further enhance this trade relationship.

Boosting Tourism and Cultural Exchange

Image Credit The Red Sea Global

In addition to the financial aspects, the currency swap agreement is also expected to boost tourism between the two countries. China recently granted Approved Destination Status in Saudi Arabia, allowing Chinese citizens to travel to the Kingdom on group tours. 

As Chinese travelers explore the rich heritage and diverse landscapes of Saudi Arabia, the initiative is expected to deepen mutual understanding and strengthen ties between the peoples of China and Saudi Arabia, promoting a robust exchange of ideas and experiences. 

This development will likely stimulate tourism and cultural exchange between the two nations.

Reducing Dependency

One of the main aims of the currency swap agreement is to promote the use of local currencies. This is particularly significant in the current global financial context, where the dominance of the US dollar is increasingly being challenged. 

Using local currencies in bilateral trade and investment can reduce dependency on the dollar and mitigate risks associated with exchange rate fluctuations.

Growing Financial Relationship

The currency swap agreement indicates Saudi Arabia and China’s strong and growing financial relationship. It is a testament to their shared commitment to enhancing financial cooperation and promoting trade and investment. 

The deal is also expected to have significant implications for the broader global financial landscape, particularly in promoting the use of local currencies.

Future Prospects

The currency swap agreement between SAMA and PBC is seen as a significant step forward in the financial relationship between Saudi Arabia and China. 

While the deal is initially valid for three years, it can be extended by mutual agreement. This provides a solid foundation for the ongoing development of Sino-Saudi financial relations.

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