Qatar May Be Lone Hold-out As Gulf Raises Rates After Fed

Qatar may buck the trend as the Gulf's rich oil exporters hike interest rates in response to US monetary tightening, but Doha's strong financial position means its currency should escape major pressure, commercial bankers said on Thursday.After the US Federal Reserve raised rates by 0.25 percentage point on Wednesday, the central banks of Saudi Arabia, the United Arab Emirates, Kuwait and Bahrain followed suit within 90 minutes. Oman had already allowed its official rate to drift up in recent months.They were acting to head off any downward pressure on their currencies, which are pegged or closely linked to the US dollar.

By midday on Thursday, however, Qatar - which pegs its riyal at 3.64 to the dollar - had not announced a rate hike and had given no indication it was considering one. Central bank officials in charge of policy could not be reached for comment.Some commercial bankers said they still expected a Qatari hike later in the day or in coming days. Central bank governor Sheikh Abdullah bin Saud al-Thani is visiting Kazakhstan, and some suggested this might have delayed Qatari decision-making."The expectation is that they will do it, as the others have. We'll know very soon," said the managing director of a Qatari bank, declining to be named because of political and commercial sensitivities.

Several others, however, said Qatar might see no need to follow US policy. Doha was slower than most central banks to cut rates during the global financial crisis, so it now has a relatively high official rate structure that can accommodate small rises in US rates for now.Also, Qatar is one of the Gulf's financially strongest states; its sovereign wealth fund has several hundred billion dollars of assets that could be deployed if necessary to head off any attack on its currency.

SOURCE : ARABIANBUSINESS

Comments Post Comment

Leave a Comment

Submit