EXCLUSIVE – Qatar tells native banks to cease foreign money swap offers overseas – sources

A cashier counts Qatari riyal notes at a cash changer in Doha Could 28, 2013. REUTERS/Fadi Al-Assaad

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DUBAI/DOHA, Sept 5 (Reuters) – Qatar’s central financial institution has informed banks within the Gulf state to not trade its foreign money with entities outdoors the nation with out prior permission, 5 sources informed Reuters, in a transfer bankers say goals at ending the riyal’s divergence towards the greenback.

The Qatari riyal, formally mounted at 3.64 to the greenback since 2001, has within the offshore market been quoted beneath its peg for essentially the most half since mid-2017 when 4 Arab states boycotted Doha in a political row, which was resolved in early 2021.

Within the communication despatched to treasury administrators at native banks on Monday, the Qatar Central Financial institution (QCB) instructed banks to not have interaction in any swap offers to acquire riyals or {dollars} with any entity outdoors Qatar, the sources with data mentioned.

The discover mentioned banks ought to search permission from QCB earlier than conducting any such transactions, they added.

QCB, in response to a Reuters question, mentioned it “isn’t taking any motion to restrict the capability of banks to interact in swap transaction with counterparties”.

“Such issues are left to the business and danger administration judgement of banks,” the central financial institution mentioned, including that any such directive could be printed on its web site.

A foreign money swap settlement entails the trade of 1 foreign money for one more over a selected time horizon along with the fee of a premium. It’s a software used to lock-in a hard and fast trade fee or hedge towards foreign money fluctuations.

Final 12 months, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt ended a row with Doha that had seen the 4 nations sever political, financial and journey ties with Qatar over allegations it helps Islamist militants, which Doha denies.

Through the dispute, tiny however rich Qatar, among the many world’s largest fuel exporters, sued banks within the UAE and Saudi Arabia, accusing them of inflicting injury to its economic system by what it referred to as abroad foreign money manipulation.

Qatar settled a separate swimsuit towards Emirates NBD Financial institution and Abu Dhabi Industrial Financial institution earlier this 12 months and a New York choose dismissed a case towards Saudi Arabia’s Samba Financial institution, however its not instantly clear whether or not a case towards First Abu Dhabi Financial institution remains to be pending.

Through the 3-1/2 12 months embargo, international foreign money, particularly the greenback, was scarce in Qatar, bankers say. QCB required banks to hunt approval to purchase USD on a case-by-case foundation.

Publish-boycott there was an expectation that the worth of the Qatari riyal would come in keeping with the peg however that has not occurred. On Tuesday, brokers have been quoting 3.6805/3.6855 riyals to the greenback within the offshore market.

Qatar’s central financial institution international reserves and arduous foreign money liquidity has risen about 3.8% prior to now two years to 211.3 billion riyals in July, official knowledge exhibits, from 203.6 billion riyals in 2020.

“It does not make sense that Qatari riyal remains to be not buying and selling on the peg,” mentioned a Gulf financial knowledgeable who declined to be named as a result of sensitivity of the matter.

“Qatar is receiving extra greenback income than ever earlier than and, due to all of the followers coming to Qatar for the World Cup, there may be certain to be a a lot bigger than regular demand for riyals on worldwide markets.”

Qatar hosts soccer’s World Cup in November.

Reporting by Hadeel Al Sayegh in Dubai and Andrew Mills in Doha, further reporting by Yousef Saba in Dubai, Modifying by Angus MacSwan

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