A weakening Dollar throughout the second half of 2022, and into the new year, has coincided with a ramping up of de-Dollarization efforts by foreign nations. China has been particularly aggressive toward the Dollar while expanding economic cooperation with key energy producers Russia and Saudi Arabia.
Saudi Arabia has just announced that it is open to discussing international trade using currencies other than the US Dollar. In Russia, China’s Yuan has come to dominate the currency market as trade between the nations surged last year. China has shown increasing interest in Southeast Asia, where utilization of the Dollar may also be starting to wane.
Related ETFs: Invesco DB US Dollar Index Bullish Fund (UUP), WisdomTree Chinese Yuan Strategy Fund (CYB), WisdomTree Emerging Currency Strategy Fund (CEW)
The long march toward de-Dollarization, a strategy that has been gradually implemented by China and other nations opposed to the US Dollar’s supremacy over global trade and its resulting status as the world’s reserve currency, may have taken a few steps forward this week.
Yesterday, Saudi Arabia’s finance minister, Mohammed Al-Jadaan, told Bloomberg that the Kingdom is open to discussions about trade in currencies other than the US dollar. This is significant, considering Saudi Arabia, and most other oil exporting countries, have long conducted the international trade of petroleum and other energy commodities in USD. Saudi Arabia and key Arabian energy economies like Qatar and the UAE have long maintained a Dollar peg in their own currencies to more easily facilitate the trade of oil and gas products in international markets.
Though Jadaan did not mention it specifically, some believe that settling oil sales in CNY is of particular interest to Saudi Arabia. The Kingdom has recently positioned itself to become a major geopolitical force by forming strong partnerships with large economies that hope to forge a path beyond the US’s longstanding global hegemony. Last month, MRP highlighted Chinese President Xi Jinping and Saudi Crown Prince Mohammed bin Salman’s participation in an in-person as part of a broader summit between the nations. Xinping has informed Gulf Arab leaders that China would like to purchase their oil and gas with Yuan.
China is already Saudi Arabia’s largest trading partner and, per Bloomberg, about $50 billion of new investment agreements were signed during the recent summit. That included more than…
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