The Canadian dollar fell on a report Saudi Arabia plans to unload Canadian stocks, bonds and cash as a diplomatic spat over women’s rights activists intensifies.

The currency dropped as much as 0.5 per cent to $1.3120 per U.S. 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. The loonie rebounded shortly afterwards to trade 0.1 per cent weaker at 9:18 a.m. in Toronto.

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 thin trading during the summer holiday could exacerbate that effect. Saudi holdings of Canadian dollar reserves are between $10 billion and $25 billion, with the upper end of that estimate representing 10 per cent 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 $1.4 billion in merchandise goods to Saudi Arabia and imported $2 billion, according to Statistics Canada data.

Saudi investments in Canada include G3 Global Holdings Ltd., a joint venture between Bunge Ltd. and Saudi Agricultural & Livestock Investment Co., which purchased the former Canadian Wheat Board in 2015. Saudi Arabia has invested about $6 billion in Canadian businesses since 2006, data compiled by Bloomberg show.