Saudi Arabia is considering additional measures against Canada amid reports it plans to unload its holdings of Canadian stocks and bonds as a dispute over women’s rights activists intensifies.
Foreign Minister Adel Al-Jubeir, speaking at a news conference in Riyadh, said there was no need for mediation in the dispute. “Canada knows what it needs to do,” he said.
The Canadian currency dropped as much as 0.5 percent to C$1.3120 per US dollar after the Financial Times reported that the Saudi Arabia central bank and state pension funds have instructed their overseas asset managers to dispose of Canadian assets starting Tuesday.
Saudi Arabia suspended diplomatic ties and halted new trade dealings late Sunday following comments by Canadian Foreign Minister Chrystia Freeland criticizing the kingdom for arrests of women’s rights activists. The kingdom has since escalated its moves against Canada, suspending flights to Toronto and ordering the return of thousands of students who are studying at Canadian schools.
Saudi’s asset sales may not have a big impact on the Canadian currency, although seasonally thin trading in August could exacerbate that effect.
Saudi holdings of Canadian dollar reserves are between C$10 billion ($7.7 billion) and C$25 billion, with the upper end of that estimate representing 10 percent of daily Canadian dollar volumes, according to estimates from the Canadian Imperial Bank of Commerce.
“That’s enough to leave a mark on the loonie in August when volumes are typically lighter,” said Bipan Rai, North American head of foreign exchange strategy at CIBC. Still, Rai said the impact on the currency should be “ephemeral” as bilateral trade between Saudi Arabia and Canada is small.
So far this year, Canada has exported C$1.4 billion in merchandise goods to Saudi Arabia and imported C$2 billion, according to Statistics Canada data.
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