Related articles .. link .. Saudi, Chinese oil giants ink joint refinery deal ... and .. link .. IMF SDR's ~The IMF and the eurozone: weighing unconventional options to stabilise the global economy Snip ~ "China has signed a series of currency swap agreements in recent years with key trading partners to boost the use of the yuan for the direct settlement of international trade. The UAE signed in January a currency swap agreement with China worth $5.5bn to boost trade and investment. Its central bank said in March including yuan into official reserves was long-term issue.
Thursday, May 24, 2012
Saudi FX reserves would benefit from Chinese yuan’
Saudi Arabia would benefit from diversifying of its large foreign currency reserves into the Chinese yuan, the Opec state’s economy and planning minister said, adding the exposure of the kingdom’s banks to large corporates was not a concern.
“We need more diversity in international reserve currencies. And with the (Chinese) economy, which is now the (world’s) second largest, it is unnatural that their currency is not a major participant in the foreign exchange market,” Mohamed al-Jasser told Reuters on Tuesday from the sidelines of a financial conference in the Saudi capital.
Asked whether it was a good idea for Saudi Arabia to diversify its vast foreign asset reserves of $561bn into the yuan, al-Jasser, a former central bank governor, said: “What’s good for the world is good for Saudi Arabia.”
The world’s No 1 oil exporter is, like most of its Gulf Arab neighbours, a major holder of dollar assets as its riyal currency is pegged to the dollar, and crude accounts for around 85% of its budget revenue.
Saudi Arabia, which is the only Middle Eastern member of the G20 group of developed and emerging economies, and its central bank (Sama) rarely comment on the reserve strategy.
China has signed a series of currency swap agreements in recent years with key trading partners to boost the use of the yuan for the direct settlement of international trade.
The UAE signed in January a currency swap agreement with China worth $5.5bn to boost trade and investment. Its central bank said in March including yuan into official reserves was long-term issue.
In April, China imported 1.07mn bpd of crude oil from Saudi Arabia, its biggest source of oil imports, 14% higher than a year earlier and 15% higher than in March, Chinese customs data showed.
Saudi exports to China, including oil, have soared over the past two decades to 112.2bn riyals ($29.9bn) in 2010 from as little as 346mn in 1991, while imports jumped to 46.9bn riyals from mere 2.3bn over the same period.
Chinese Premier Wen Jiabao pressed Saudi Arabia on his January visit to Riyadh to open its huge oil and gas resources to expanded Chinese investment.
The International Monetary Fund recommended to Saudi Arabia in April to tighten regulation and supervision of banks’ large loan exposures to big corporate groups despite decent overall capitalisation.
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