- US dollar under serious threat as Saudi Arabia’s top official discloses that the country is open to using Yuan for crude settlement amid the upcoming BRICS Summit.
- However, the US could “put up a fight” as former president Donald Trump proposes 100% tariffs on countries moving away.
The de-dollarization strategy is still on as Saudi Arabia seeks to implement the BRICS long-term goal by moving away from the Petrodollar to the Petroyuan. While the Middle Eastern country has not yet joined the alliance, it has been invited to attend the 2024 summit. Before its official acceptance, Saudi Arabia doubled its effort to strengthen its existing relationship with China by incorporating Chinese products such as the C919 passenger jet, electric vehicles, and renewable energy infrastructure.
To take this relationship to the next level, Saudi Minister of Industry and Mineral Resources Bandar Al-khorayef has disclosed that the country is open to new ideas, including using yuan in a crude settlement. According to him, their decision hinges on the country’s best interest, as they try not to mix politics with business.
The petroyuan is not substantial to [the ministry]; we believe Saudi Arabia will do what’s in its best interest … but I think Saudi Arabia will always try new things and is open to new ideas, and we try not to mix politics with commerce.
According to experts, the broader use of petroyuan is seen as the next step for the internationalization of the Chinese currency and a challenge to the US dollar’s dominance. Beijing’s effort to advance the reach of the Yuan in international trade is evident in the three-year currency swap deal signed with Saudi Arabia last year. This deal was worth 50 billion yuan (US$7.1 billion) and demanded that trading partners trade in local currencies.
Saudi Arabia Defends Idea, BRICS Alliance Receives Massive Interest
Saudi Arabia is China’s second-largest source of crude export and a formidable entity in global supplies. This implies that ditching the Petrodollar could greatly impact the US economy.
Speaking on this possibility, Khorayef explained that its monitoring policy is based on balancing the exchange rate between the yuan and the US dollar. However, he did not provide a timeline for when this would happen.
This gives us a great opportunity to plan and compete, but most importantly, it gives our investors who will invest in our country the ability to hedge their risk on currency…From a commercial point of view, between a supplier and a customer, I think such an arrangement can happen with the freedom they have. It is not something that we would look at from a policy point of view.
Conversely, BRICS is increasing its effort to mitigate the reliance on the US dollar by designing its native currency.
Fascinatingly, this idea has resonated with over 50 countries which have expressed interest in joining the alliance. According to our previous report, all interested countries are located within four main continents – Asia, Africa, South America, and Eastern Europe.
According to analysts, the BRICS initiative and the successful implementation of the pretroyuan idea could position Bitcoin and XRP as places of exploration. However, the US is willing to strongly resist this expansion as presidential candidate Donald Trump threatens that his administration would impose a 100% tariff on these countries. As we explained, Trump has also proposed a 60% increment on all Chinese imports when elected into office.
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