Rousseff Assesses, China-Saudi Oil Deal Will Strengthen NDB Trade in Local Currencies

May 31, 2023, 2022 (EIRNS)—In an interview with China CGTN TV network, New Development Bank President Dilma Rousseff stressed the importance of recent announcements of China-Saudi Arabia oil deals to be paid in yuan/renminbi, and said that the NDB will boost trade in local currencies. Rousseff said:

“I believe that in the current world there is a growing trend to promote commercial exchanges using local currencies. I want to say that there are several important examples of these exchanges. For example, the petroleum market is a significant field in today’s currency exchange. We now see when China and Saudi Arabia have their own oil trading, both countries use local currencies to conduct trade. RMB [renminbi] is the currency that the two countries use. Another example is countries in the Global South are increasingly using local currencies for trade payments.

“What we are proposing is that part of the financing for the member countries should be settled in their local currencies. This type of financing can also be carried out using the currencies of other developing countries or emerging market countries in the currency basket. I believe this is advantageous. Many people question whether it is a measure to counter other currencies. In short, we don’t think the absolute privilege of settling all trades in U.S. dollar or euros is right. We need to use our own currencies to strengthen the foundations of trade and investment in our countries,”

said the bank president, who was President of Brazil in 2014 when the five BRICS countries founded the bank at their Fortaleza, Brazil summit.

CGTN commentator Matteo Giovannini elaborated in an article for CGTN yesterday on the significance of reports that Saudi Arabia may join the NDB, writing that it will expand the NDB’s credit capacity and strengthen the move towards de-dollarization of trade and investment.

Giovannini, a finance professional at the Industrial and Commercial Bank of China in Beijing and a member of the China Task Force at the Italian Ministry of Economic Development, wrote that if Saudi Arabia should join the NDB, it would be a milestone, which could “secure the bank new avenues of funding at a time when the organization is finding it hard to mobilize its own resources due to the impact of Western sanctions on Russia.” Furthermore, given Saudi Arabia’s role in the world energy market, the perspective of using currencies other than the dollar in energy trade will boost the transition to a non-dollar trade currency system.

“As BRICS nations are ramping up de-dollarization efforts to utilize local currencies to settle cross-border trade, the inclusion of Saudi Arabia, which is a heavyweight in global energy markets, could have impactful effects on the international currency exchange system. A gradual but irreversible reduction in the level of oil and gas deals made in U.S. dollars among BRICS nations will pave the way for China’s yuan to become a go-to currency for energy trade settlements.”