Saudi Arabia Willing to Trade in Alternative Currencies

Saudi Arabia is open to discussions about trade in currencies other than the US dollar, according to the kingdom’s finance minister. This is a significant shift from the kingdom’s previous position, and it could have major implications for the global economy.

"It's perfectly fine to discuss how we settle our trade arrangements, whether it's in US dollars, euros, or Saudi riyals," Mohammed Al-Jadaan told Bloomberg TV on Tuesday in an interview in Davos.

Al-Jadaan stated that he does not believe that any discussion that could potentially improve global trade should be dismissed outright.

The world’s largest oil exporter, Saudi Arabia, is seeking to strengthen its relations with crucial trade partners including China. The kingdom is a pillar of the petrodollar system established in the 1970s that relies on pricing crude exports in the US currency.

During President Xi Jinping’s visit to Riyadh last year, the two countries agreed to boost coordination on energy policy and exploration. During that trip Xi said that China would make efforts to buy more oil from the Middle East and also wanted to settle that trade in the yuan. This would help to increase the use of the Chinese currency in the region and boost the country’s economic influence.

Al-Jadaan stated that Saudi Arabia enjoys a very strategic relationship with China, and that they would like to develop similar relationships with other countries including the United States and Europe. He said that Saudi Arabia is willing and able to work with any country that is interested in developing a strategic relationship.

Saudi Arabia is working with multilateral institutions to provide support to Pakistan, Turkey and Egypt, as part of the kingdom's largesse to nations it deems "vulnerable," Al-Jadaan said.

Al Jadaan stated that they are investing heavily in various countries and will continue to look for opportunities to invest. He emphasized that it is very important to bring stability.

The minister said that his country is looking to invest $10 billion in Pakistan. He added that Saudi Arabia had already extended the term of a $3 billion deposit to boost Pakistan's foreign-currency reserves late last year, and that the kingdom is now exploring the possibility of increasing the amount.

"We are providing oil and derivatives to support their energy needs," Al Jadaan said. "So there is a lot of effort, but we wanted this to be conducted."

"The kingdom is also discussing with the World Bank and other institutions how to provide more support to Pakistan," the minister said.

Al-Jadaan said that Saudi Arabia is also providing a lot of support to Egypt, not just through grants and deposits, but also through investments.