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.
mkassem@thenational.ae
