The six Arab nations have been strengthening trade ties with other countries, including India and ChinaCountries in the Gulf Cooperation Council (GCC) have been slowly diversifying away from the US dollar, with bilateral trade growing exponentially with other countries — most notably China and India — said a new report.  The six-nation GCC's holdings of US Treasury securities have decreased in recent years, accounting for 7 per cent of their total foreign assets, according to a study on GCC: How are petrodollars invested? — released by the Institute of International Finance (IIF) late on Tuesday.“GCC countries have begun to slowly diversify away from the greenback as bilateral trade with other countries, most notably China and India, increases. While the US remains the most important geopolitical and military partner in the region, it has long trailed both China and the EU when it comes to trade," said Garbis Iradian, chief economist for Mena at IIF.  "China is now the region’s largest trade partner by a wide margin. While trade is still mostly conducted in US dollars, GCC countries have slowly started to sign bilateral trade agreements that would allow them to settle trade in other currencies,” Iradian added.  The UAE has signed the Comprehensive Economic Partnership Agreement (Cepa) with India, which resulted in a massive increase in bilateral trade. In July 2023, the UAE and India also signed a deal to settle trade in rupees, instead of dollars, which will help cut transaction costs by eliminating dollar conversions. The two countries also agreed to set up a real-time payment link to facilitate easier cross-border money transfers.Similarly, the Central Bank of the UAE and the People’s Bank of China signed an agreement to renew the currency swap in November, which has a nominal value of Dh18 billion (equivalent to 35 billion Chinese yuan). This is aimed at promoting financial and trade cooperation in the next five years. (ICE DUBAI)

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