LONDON /DUBAI // Several British banks said on Friday they had stopped dealing in Qatari riyals, as the diplomatic crisis disrupted overseas trading of its currency.
Offshore trade of the riyal has become increasingly volatile and illiquid as a result, raising risks for banks.
Lloyds Banking Group said a “third-party supplier” which handles its foreign exchange service had ceased trading in Qatari currency as of June 21. It is no longer available for sale or buy-back across the group’s high street banks including Lloyds Bank, Bank of Scotland and Halifax.
Tesco Bank, Royal Bank of Scotland and Barclays have also stopped dealing in the riyal, although Barclays is continuing the service for corporate customers. HSBC is still providing riyals for high street customers.
Banks from the four Arab states that have cut ties with Qatar reduced or halted riyal transactions earlier this month, as have some other countries.
This week the riyal traded between offshore banks as low as 3.81 to the US dollar, its lowest level this decade and more than 4 per cent below its peg of 3.64 to the dollar.
In an effort to reassure markets that the riyal was still widely traded overseas, the Qatari central bank declared in the early hours of Friday that it would guarantee all dealings for customers inside and outside Qatar.
