Tuesday, July 4, 2017

Qatar's Riyal in trouble? Reports say banks and currency exchanges are refusing it

July 4, 2017| Tuesday

Reports are coming in that numerous banks and currency exchanges outside Qatar are refusing to deal in Qatari riyals amid the ongoing diplomatic spat in the Gulf. Several Qatari nationals and residents traveling in Europe, the US and Asia have contacted news agencies saying they have been unable to exchange Qatari currency in the countries they were visiting.

However, not all banks in all countries are affected.
Exchanges in Jordan and Lebanon, for example, are still operating normally.

Many exchange houses in the Gulf reportedly stopped accepting riyals early on in the crisis, and just last week, global institutions have followed.

Among countries confirmed as having orders to avoid the currency include the United States, UK, Thailand, India, Sri Lanka, Pakistan, and the Philippines - the last four having a significant number of expat workers in Qatar.

The governments of some of these countries deny that there is an official order to refuse trade in Qatari riyals, however, there is also no memo to say that the banks and exchanges cannot refuse either.

In early June, Qatar's Gulf neighbours Saudi Arabia, UAE, Bahrain and Egypt ceased air, sea and land links with the country, which has been accused of funding terrorism. Qatar denies the claim.

One effect of the diplomatic crisis in the gulf region is that the Qatari riyals is now unprofitable for many banks. This is because the currency recently depreciated against the US dollar, which it has been pegged to since July 2001.

The Qatar Central Bank (QCB) attempts to keep the riyal fixed at around 3.64 per dollar. But it recently reached 3.76  – its weakest level on record.

The Post Office, one of the UK’s main operators of currency-exchange services, said it took the decision to “temporarily” stop trading in riyals on June 5. Other UK foreign exchange services ceased trading Qatar riyals from 21 June.

The currency is no longer available for sale or buy-back across branches of Barclays, RBS, Lloyds Banking Group and Tesco Bank. However, currency supplier Travelex said trading in riyals had only been suspended in some markets due to "business challenges" and that it announced it has resumed purchasing Qatar riyal globally.

Western Union and UAE Exchange have issued responses that they will continue to trade in Qatari riyals.


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Source: CNBC News

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