Business | Banking
Qatar CD auctions mop up $2.7b in inflation fight
Qatar's central bank said yesterday it had issued 9.8 billion Qatari riyals ($2.69 billion) worth of certificates of deposit (CDs) to banks since March to mop up liquidity as the Gulf state fights near-record inflation.
- Reuters
- Published: 23:59 August 7, 2008
Dubai: Qatar's central bank said yesterday it had issued 9.8 billion Qatari riyals ($2.69 billion) worth of certificates of deposit (CDs) to banks since March to mop up liquidity as the Gulf state fights near-record inflation.
The central bank of the world's biggest exporter of natural gas has been holding CD auctions every 28 days since March 4 to help it fight inflation at 14.8 per cent in the first quarter and guide interest rates.
In 11 issues ranging in tenure from 28-days to nine months, the central bank has auctioned 9.8 billion riyals to Qatari and foreign banks based in the Gulf state, said Adel Al Baker, the central bank's assistant director for banking affairs.
The CDs at its July 29 auction were sold at a coupon rate of 3 per cent.
"There was big liquidity in the market because banks were keeping it on their accounts. We've sucked a lot of this out," Baker said.
The auctions were meant to soak up liquidity and tackle inflation as investors piled into the riyal expecting the state might revalue, central bank Governor Shaikh Abdullah Bin Saud Al Thani said in March.
Investors piled into riyals after Prime Minister Shaikh Hamad Bin Jasem Bin Jabr Al Thani said in February the state was studying revaluing its riyal among options to fight the Gulf region's highest rate of inflation.
Business Editor's choice
-
‘Wrong Way' Krugman
The source of our economic malfunction lies with government-mandated bank regulations
-
Greek exit could make Eurozone stronger
Departure will show limits of bailouts and allow remaining members to act much more like a unit
-
UAE upholds values of free trade
Recently released statistics confirm an established fact, namely that of the UAE embracing the free trade principle in general and imports in particular
