Canadian dollar falls after Saudi Arabia reportedly sells off assets

Arturo Kim
August 8, 2018

This comes as Saudi Arabia sells Canadian assets as the kingdom increases its response to Ottawa's criticism of the arrest of a female activist.

Speaking to reporters on Wednesday, Adel al-Jubeir, Saudi Arabia's foreign minister, said the kingdom was still "considering additional measures" against Canada.

In a tweet on Friday, the Canadian Foreign Ministry said it was "gravely concerned" by the arrest of Saudi activist Samar Badawi and other women's rights campaigners, and called for their release.

Relations between the countries have dramatically deteriorated following last week's intervention by Canada's foreign minister, Chrystia Freeland, over the detention of women's rights activists.

According to a report in the Financial Times, Saudi Arabia has started selling Canadian assets en masse, including stocks and bonds.

Since then, the Saudi kingdom has pursued a scorched-earth policy towards anything related to Canada.

Crown Prince Mohammed bin Salman recently went on a global tour touting proposed economic reforms and promoting his vision for the kingdom as "the next Europe".

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The currency dropped as much as 0.5 per cent to $1.3120 per USA 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.

Riyadh also froze new trade with Ottawa and made plans to relocate thousands of Saudi students and patients in Canada to other countries.

Canada's share of Saudi Arabia's FX reserves would likely not be enough by itself to hurt the loonie, said Mark McCormick, North American Head of FX Strategy at TD Securities.

Saudi students in Canadian universities have been given four weeks to pack their bags and leave the country as their scholarships have been suspended.

It remains unclear how many Saudi patients will be affected by the decision.

Canadian Prime Minister Justin Trudeau is reportedly expected to be pressed on the diplomatic crisis at a press conference in Montreal. Saudi Arabia has invested about $6 billion in Canadian businesses since 2006, data compiled by Bloomberg show.

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