Qatar riyal trad­ing falls dra­mat­i­cally amid GCC dis­pute, say traders

While pegged to the US dol­lar, trad­ing has been volatile

The National - News - Business - - Front Page - Mah­moud Kassem mkassem@then­

Trad­ing in Qatar’s riyal in the UAE has dropped sig­nif­i­cantly since the GCC dis­pute erupted ear­lier this month, ac­cord­ing to for­eign ex­change deal­ers.

While most of the big ex­change houses in the UAE con­tinue to have the ca­pac­ity to deal in the Qatari riyal some of the smaller com­pa­nies have stopped as the vol­umes traded do not make it worth their while, a source said.

“The flow has gone down sub­stan­tially,” said an ex­ec­u­tive at a UAE for­eign ex­change house who did not want to be named. “We ex­pect trade in the Qatari riyal to re­main sub­dued.”

The ex­ec­u­tive said that the ex­change house was now trad­ing be­tween 100,000 (Dh99,877) to 150,000 riyals a day, whereas be­fore the cri­sis be­gan they were trad­ing a cou­ple of mil­lion Qatari riyals a day.

The UAE, Saudi Ara­bia, Bahrain and Egypt on June 5 broke off diplo­matic and trade ties with Qatar and stopped air, sea and land ac­cess to the coun­try over Doha’s sup­port for “ter­ror­ist groups aim­ing to desta­bilise the re­gion”.

The Qatari riyal is pegged to the US dol­lar but it has still been volatile in trad­ing since as traders strug­gled to fill or­ders amid poor liq­uid­ity with some banks un­will­ing to do busi­ness on the cur­rency, ac­cord­ing to Reuters. A gap has grown be­tween the on­shore and off­shore trade of the riyal.

The decline in the vol­ume of trade in the riyal comes af­ter Qatari na­tion­als were asked to leave the UAE.

Prop­erty bro­kers in Dubai this month re­ported a rush in sales from Qatari in­vestors at­tempt­ing to get their as­sets out of the UAE be­fore the dead­line to leave the coun­try.

Bro­kers said prop­erty port­fo­lios worth mil­lions of dirhams were sold at steep dis­counts as Qataris rushed to liq­ui­date their as­sets and leave.

Twelve-month Qatari for­wards, which cur­rency traders are fore­cast­ing the riyal to be trad­ing against the dol­lar in a year’s time, pared gains they have been making. On Tues­day, 12-month for­wards on the Qatari riyal fell 1.6 per cent to 3.8 riyals against the US dol­lar. For­wards on the riyal shot up to as much as 3.86 riyals per dol­lar in the after­math of the cri­sis and were trad­ing at 3.65 be­fore the spat. In the spot mar­ket yes­ter­day, the dol­lar was trad­ing at 3.68 riyals.

Fadi Al As­saad / Reuters

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