Dubai: Foreign deposits at Qatar’s banks fell the most in almost two years last month as customers withdrew funds following a diplomatic row with four Arab nations led by Saudi Arabia.
Non-resident deposits with the 18 lenders in the world’s biggest liquefied natural gas exporting nation dropped 7.6 per cent to 170.6 billion riyals ($47 billion; Dh167.78 billion) in June from a month earlier, according to data posted on the Qatar Central Bank’s website on Wednesday. The decline is the biggest since November 2015, the data show.
Qatar Investment Authority, the country’s sovereign wealth fund, has placed billions of dollars in deposits in local banks since then to shore up liquidity and soften the blow, people familiar with the development said last month.
“Qatar’s domestic liquidity was expected to come under pressure due to the diplomatic rift, given that Qatar banks have grown more reliant on external funding in light of lower energy prices,” Carla Slim, an economist for the Middle East and North Africa at Standard Chartered Plc, said in an email.
Higher rates
The slide in non-resident holdings, which account for 22 per cent of overall deposits, comes even after local lenders raised interest rates to try and attract foreigners. The Qatar three-month interbank offered rate, a benchmark used to price some loans, climbed to 2.52 per cent on July 17, the highest since at least September 2010, when Bloomberg began collecting the data.
Overall bank credit within Qatar fell 0.6 per cent in June to 780 billion riyals, according to the data. Qatar has a $200 billion (Dh734.6 billion) spending plan in preparation for the 2022 football World Cup.
