Saudi Arabia’s Finance Minister Mohammed Al-Jadaan has announced that the country is open to trading in currencies other than the US dollar. This marks a pivotal moment in history, as it signals a potential move away from the US dollar being the dominant global currency.
Saudi Arabia’s Change of Tune Signals a Shifting Economic Landscape
Global elites convened in the Swiss Alpine city of Davos for the 2023 World Economic Forum, and Saudi Arabia’s Finance Minister Mohammed Al-Jadaan made a surprise announcement on Tuesday during an interview with Bloomberg TV. Al-Jadaan said that there is no issue discussing how to set up trade agreements in other currencies, such as the euro or Saudi riyal, rather than just the US dollar.
I don’t think we are dismissing any discussion that can improve trade around world.
These remarks were seen by many as a step towards de-dollarization. To understand why this is significant, we must look back to the 1971, when President Richard Nixon ended the gold standard and oil prices rose for three more years. A meeting was held in 1973 and 1974 between Federal officials and US Treasury Secretary William Simon, in the presence of the Saudi monarchs in Riyadh. This was when the petrodollar was born – Simon convinced the Saudis to sell oil for US dollars, and to buy US Treasury bonds.
Since then, the petrodollar has been a key factor in the US dollar’s hegemony, and more recent events have brought its future into question. For example, Saudi Arabia has been looking into joining the BRICS countries (Brazil, Russia, India, China, and South Africa) since the China-GCC summit, where Chinese President Xi Jinping encouraged the Gulf monarchs to accept the yuan in exchange for oil. Additionally, last March, Saudi Arabia said it was considering accepting the Chinese currency for oil. The Wall Street Journal reported that the Saudis were unhappy with US President Biden’s deal with Iran concerning the country’s nuclear program.
In October, it was reported that 2022 members of the Saudi government, including Crown Prince Mohammed Bin Salman were not happy with Biden’s approach. Al-Jadaan went into more detail on Tuesday, saying that Saudi Arabian Leaders had great relations with China and other countries.
“We enjoy a very strategic relationship with China and we enjoy that same strategic relationship with other nations, including the US, and we want to develop that with Europe and other countries that are willing and able to work with us,” Al-Jadaan commented. So far, none of the considerations, such as accepting yuan for oil and joining the BRICS, have come to
