Dubai: Qatar, hit by sanctions, is paying more to build its liquidity.
Qatar’s central bank paid higher yields on Wednesday for its 1 billion Qatari riyal (Dh976.9 million) treasury bills (T-bills) used for domestic liquidity management, signalling continued pressure on the money flows due to the sanctions.
Saudi Arabia, the UAE, Bahrain and Egypt cut diplomatic relations and closed transport routes on June 5, accusing the nation of funding Islamist terrorism. The move has negatively impacted liquidity and food supplies in Qatar.
“There is a pressure on the central bank to attract liquidity in the system. The investors need an incentive to attract them,” Nadi Bargouti, head of asset management at Emirates Investment Bank, told Gulf News.
Qatar’s central bank sold T-bills worth 650 million riyals with a three-month maturity and a yield of 2.25 per cent, the central bank said on its website.
The central bank paid higher than the 2.14 per cent yield at which the bank sold 750 million riyals one month ago.
The central bank sold T-bills worth 350 million riyals with a six-month maturity and a yield of 2.49 per cent, higher than that paid for the three-month maturity T-bills.
Even banks, which have been strapped for liquidity, have been resorting to raising money.
Doha Bank was in talks with foreign lenders about the possibility of raising long-term funding through a private placement or public debt sale, Bloomberg reported, quoting the bank’s chief executive officer Raghavan Seetharaman.
Qatar National Bank is also said to have held early discussions with international banks about the possibility of a private placement, bond sale or loan.
Moody’s Investors Service last month lowered its outlook for Qatar’s banking system to negative from stable due to weakening operating conditions and continued funding pressures facing Qatari banks.
The Qatar Investment Authourity (QIA) is also encashing some of its investments, recently reducing its stake in Credit Suisse Group by a per cent or so.
The QIA owns stake in Barclays, Volkswagen Group, Porsche and Hochtief, among other companies. The country had about $340 billion (Dh1.25 trillion) in foreign exchange reserves as at the end of July.
Fitch predicted the Qatari government’s net foreign assets would fall to 146 per cent of gross domestic product this year, down from 185 per cent last year.