Business & Economy

Qatari riyal trade disrupted at several UK banks

Gulf crisis affects overseas trading of Qatar's currency, making it unavailable at several British banks.

This week the riyal traded between offshore banks as low as 3.81 to the US dollar [Fadi al-Assaad/Reuters]

At least six British banks have said they had fully or partially stopped dealing in Qatari riyals as the Gulf crisis disrupted overseas trading of Qatar's currency.

A spokeswoman for Britain's Lloyds Banking Group said on Friday a "third-party supplier" which handles its foreign exchange service had ceased trading in Qatar's riyal as of June 21.

"This currency is no longer available for sale or buy-back across our high street banks including Lloyds Bank, Bank of Scotland and Halifax," she said.

Tesco Bank said it had halted dealings in the riyal, while Barclays stopped trading riyals for retail customers but continued the service for corporate customers, a source said.

Royal Bank of Scotland said it had stopped trading riyals for retail customers.

A spokeswoman for HSBC said on Friday that the bank was still providing riyals for high street customers.

Exchange company Travelex said on Thursday it had resumed purchasing the Qatari riyal globally after a brief suspension "due to business challenges".

READ MORE: Qatari riyal under pressure amid Gulf diplomatic rift

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 four percent below its peg of 3.64 to the dollar.

Most bankers in the Gulf do not think the peg will break; onshore, the Qatari central bank has continued to provide ample supplies of dollars near 3.6415 under its peg mechanism.

The world's biggest liquefied natural gas exporter has huge reserves with which it could defend its currency.

The Qatari central bank declared in the early hours of Friday that it would guarantee all dealings for customers inside and outside Qatar.

"Qatari riyal's exchange rate is absolutely stable against the US dollar, and its exchangeability inside and outside Qatar is guaranteed at any time at the official price," the central bank said, calling reports that some exchange companies had stopped buying the riyal "baseless".

The Gulf crisis

The development came weeks after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut ties with Qatar on June 5 and imposed a blockade, accusing Doha of supporting "terrorism". The allegation is denied by Qatar.

The four Arab states have set a deadline of around Monday next week - officials have not publicly specified the exact time - for Doha to agree to demands such as shutting television channel Al Jazeera and reducing ties to Iran.

Doha has shown little sign of complying, and the four states have said they could impose fresh sanctions if their demands are not met. This threat pushed the cost of insuring Qatari sovereign debt against default to a 16-month high on Friday.

Source: Reuters news agency