The central banks of China and Saudi Arabia have agreed on their first currency swap to foster bilateral commerce denominated in the yuan and the riyal, taking a crucial step towards unlinking the world’s biggest oil trade with the US dollar.

The People’s Bank of China (PBOC) and the Saudi Central Bank (SAMA) signed a three-year swap agreement for a maximum value of 50 billion yuan (US$6.97 billion), or 26 billion riyal, according to statements on Monday by the two monetary authorities.

The pact, which can be extended by mutual agreement, reflects the strengthening collaboration between the two central banks, SAMA said. The Saudi central bank was looking to strengthen its connections with the PBOC via bilateral dialogues, collaborations in multilateral forums, as well as partnerships in international organizations, SAMA’s governor Ayman bin Mohammed Al-Sayari said in an emailed interview with the Post last month.