Qatar riyal falls further in offshore forwards market

dubai — Qatar’s riyal fell further against the US dollar in the offshore forwards market early on Friday because of concern about capital outflows due to the diplomatic crisis hitting the country.

One-year dollar/riyal forwards rose as high as 630 points, their highest level since December 2015, when a plunge of oil and gas prices caused concern about the viability of Gulf economies. In that month, the forwards peaked at 650 points.

Five-year Qatar credit default swaps, used to hedge against the risk of a Qatari sovereign debt default, rose to 93.6 points from 90.1 late on Thursday. The cost of insuring exposure to Qatari sovereign debt rose to 101 basis points on Friday — a fresh sevenmonth high — as a diplomatic crisis continued whilst the cost for Saudi Arabia touched new four-month highs.

Five year credit default swaps for Qatar rose four basis points (bps) from Thursday’s close to the highest since mid-November, according to data from IHS Markit.

They are up 44 basis points since the start of the week when several Arab countries including Saudi Arabia and the UAEsevered diplomatic relations with Qatar, suspended air, land and sea transport, and imposed travel bans.

Five year credit default swaps for Saudi Arabia also rose 4 bps from Thursday’s close to 107 bps, the highest level since early February. They are up 18 basis points from the start of the week.

Meanwhile Qatar’s row with Gulf states rippled through Britain’s gas market on Thursday, lifting prices as two shipments from the world’s biggest LNG producer changed course from their likely UK destination, traders and analysts said.

Diversions in the Gulf of Aden left Britain facing a lack of LNG deliveries for the remainder of June, triggering buying by traders at the country’s National Balancing Point (NBP) trading hub — Europe’s biggest gas market — to offset shortages. The July gas contract shot higher on the news, up 4.21 per cent to 37.60 pence per therm. UK gas for next-day delivery also traded higher at 38.50 pence per therm, up 4.62 per cent on the day.

The Al Mafyar vessel, carrying about 262,000 cubic metres of LNG from Qatar, is no longer heading towards the Suez Canal, shipping data shows. Its new destination is unknown.

The Zarga tanker, with a capacity of 262,000 cubic metres, executed a U-turn and appears to be heading back in the direction from which it came, shipping data shows. — Reuters