DUBAI/DOHA: Qatar’s currency came under pressure on Tuesday as Gulf Arab commercial banks started holding off on business with Qatari banks because of a diplomatic rift in the region.
Banking sources said some banks from Saudi Arabia, the UAE and Bahrain delayed letters of credit and other deals with Qatari banks after their governments cut diplomatic ties and transport links with Doha on Monday, accusing Qatar of backing terrorism.
Saudi Arabia’s central bank advised banks in the Kingdom not to trade with Qatari banks in Qatari riyals, the sources told Reuters.
Doha, the world’s biggest liquefied natural gas exporter, says it has enough reserves to support its banks and its riyal currency, which is pegged to the dollar.
Qatari banks have been borrowing abroad to fund their activities. Their foreign liabilities ballooned to QR451 billion ($124 billion) in March from QR310 billion at the end of 2015, central bank data shows.
So any extended disruption to their ties with foreign banks could potentially threaten a funding crunch for some Qatari banks. Banks from the UAE, Europe and elsewhere have been lending to Qatari institutions.
Gulf banking sources, who refused to be named because of political sensitivities, said Saudi Arabian, UAE and Bahraini banks were postponing deals until they received guidance from their central banks on how to handle Qatar.
“We will not take action without central bank guidance, but it is wise to evaluate what you give to Qatari clients and hold off until there is further clarity,” said a UAE banker, adding that trade finance had stalled for the time being.
The sources said the UAE and Bahraini central banks had asked banks under their supervision to report their exposure to Qatari banks. The UAE and Bahraini central banks did not reply to requests for comment.
With an estimated $335 billion of assets in its sovereign wealth fund and its gas exports earning billions of dollars every month, Qatar has enough financial power to protect its banks.
“We are watching the financial sector very closely. If the market needs liquidity, the central bank will definitely provide liquidity,” a Qatari central bank official told Reuters.
Nevertheless, losing some of their foreign business links could be uncomfortable for Qatari banks because they have been expanding their loans faster than other banks in the Gulf Cooperation Council (GCC). To fund this, they have been seeking loans and deposits from the rest of the GCC.
Among large banks, Doha Bank and Qatar Islamic Bank (QIB) are the most exposed to GCC deposits, with QIB obtaining a quarter of its deposits from the GCC, said Olivier Panis, analyst at Moody’s Investors Service.
“We need to look into the maturity of those deposits but if they’re short-term deposits, this could expose the banks rapidly to reduced confidence from GCC institutions,” he said.
Doha Bank and QIB did not respond to requests for comment.
Because of such worries, the Qatari riyal fell in the spot market on Tuesday to 3.6470 against the US dollar, its lowest level since June 2016, although it later rebounded to 3.6405, almost equal to its official peg of 3.64.
It also fell slightly in the one-year forward market, where traders bet on rates 12 months from now.
The riyal’s drop “is based on speculation,” the Qatari central bank official said, adding Doha had a “huge cushion” of foreign currency to support the riyal if necessary.
A commercial banker in fellow GCC state Kuwait, which did not sever diplomatic ties with Qatar, said on Tuesday that business with Qatari institutions was continuing as normal.
But there were signs that Qatar’s financial ties might be damaged well beyond the Gulf. Some Sri Lankan banks stopped buying Qatari riyals, saying counterpart banks in Singapore had advised them not to accept the currency.
In Egypt, which also cut diplomatic and transport ties with Qatar, some banks resumed dealing in Qatari riyals after halting trade on Monday, but others appeared to be continuing to limit transactions with Doha.
Banks reducing their business with Qatar could lose out financially, but the damage looks likely to be relatively minor. Panis at Moody’s estimated under 2 percent of Saudi banking sector assets were related to Qatar and the figure was around 5 percent for Bahrain, while the UAE’s exposure was also small.
Qatari riyal under pressure as Saudi, UAE banks delay Qatar deals
Qatari riyal under pressure as Saudi, UAE banks delay Qatar deals
Israeli strikes hit Yemen’s Sanaa and Hodeidah, Houthis’ Al Masirah TV says
- Houthis said that multiple air raids targeted an airport, military air base and a power station in Yemen
JERUSALEM: Multiple air raids hit several targets in Houthi-held areas of Yemen on Thursday, witnesses and the militia said, with their media saying Israel launched the strikes.
Sanaa airport and the adjacent Al-Dailami base were targeted along with a power station in Hodeida, in attacks that the Houthis’ Al-Masirah TV channel called “Israeli aggression.”
There was no immediate comment from Israel on the strikes, which come a day after Yemen fired a ballistic missile and two drones at Israel.
On Saturday, a Houthi missile attack left 16 people wounded in Tel Aviv.
Saturday’s incident had prompted a warning from Israeli Prime Minister Benjamin Netanyahu, who said he had ordered the destruction of Houthi infrastructure.
“I have instructed our forces to destroy the infrastructure of Houthis because anyone who tries to harm us will be struck with full force,” Netanyahu said in parliament.
“We will continue to crush the forces of evil with strength and ingenuity, even if it takes time.”
Syria authorities say torched 1 million captagon pills
DAMASCUS: Syria’s new authorities torched a large stockpile of drugs on Wednesday, two security officials told AFP, including one million pills of captagon, whose industrial-scale production flourished under ousted president Bashar Assad.
Captagon is a banned amphetamine-like stimulant that became Syria’s largest export during the country’s more than 13-year civil war, effectively turning it into a narco state under Assad.
“We found a large quantity of captagon, around one million pills,” said a balaclava-wearing member of the security forces, who asked to be identified only by his first name, Osama, and whose khaki uniform bore a “public security” patch.
An AFP journalist saw forces pour fuel over and set fire to a cache of cannabis, the painkiller tramadol, and around 50 bags of pink and yellow captagon pills in a security compound formerly belonging to Assad’s forces in the capital’s Kafr Sousa district.
Captagon has flooded the black market across the region in recent years, with oil-rich Saudi Arabia a major destination.
“The security forces of the new government discovered a drug warehouse as they were inspecting the security quarter,” said another member of the security forces, who identified himself as Hamza.
Authorities destroyed the stocks of alcohol, cannabis, captagon and hashish in order to “protect Syrian society” and “cut off smuggling routes used by Assad family businesses,” he added.
Syria’s new Islamist rulers have yet to spell out their policy on alcohol, which has long been widely available in the country.
Since an Islamist-led rebel alliance toppled Assad on December 8 after a lightning offensive, Syria’s new authorities have said massive quantities of captagon have been found in former government sites around the country, including security branches.
AFP journalists in Syria have seen fighters from Islamist group Hayat Tahrir Al-Sham (HTS) set fire to what they said were stashes of captagon found at facilities once operated by Assad’s forces.
Security force member Hamza confirmed Wednesday that “this is not the first initiative of its kind — the security services, in a number of locations, have found other warehouses... and drug manufacturing sites and destroyed them in the appropriate manner.”
Maher Assad, a military commander and the brother of Bashar Assad, is widely accused of being the power behind the lucrative captagon trade.
Experts believe Syria’s former leader used the threat of drug-fueled unrest to put pressure on Arab governments.
A Saudi delegation met Syria’s new leader Ahmed Al-Sharaa in Damascus on Sunday, a source close to the government told AFP, to discuss the “Syria situation and captagon.”
Jordan in recent years has also cracked down on the smuggling of weapons and drugs including captagon along its 375-kilometer (230-mile) border with Syria.
Jordan says 18,000 Syrians returned home since Assad’s fall
AMMAN: About 18,000 Syrians have crossed into their country from Jordan since the government of Bashar Assad was toppled earlier this month, Jordanian authorities said on Thursday.
Interior Minister Mazen Al-Faraya told state TV channel Al-Mamlaka that “around 18,000 Syrians have returned to their country between the fall of the regime of Bashar Assad on December 8, 2024 until Thursday.”
He said the returnees included 2,300 refugees registered with the United Nations.
Amman says it has hosted about 1.3 million Syrians who fled their country since civil war broke out in 2011, with 650,000 formally registered with the United Nations.
Lebanon hopes for neighborly relations in first message to new Syria government
- Lebanon’s Iran-backed Hezbollah played a major part propping up Syria’s ousted President Bashar Assad through years of war
- Syria’s new Islamist de-facto leader Ahmed Al-Sharaa is seeking to establish relations with Arab and Western leaders
DUBAI: Lebanon said on Thursday it was looking forward to having the best neighborly relations with Syria, in its first official message to the new administration in Damascus.
Lebanese Foreign Minister Abdallah Bou Habib passed the message to his Syrian counterpart, Asaad Hassan Al-Shibani, in a phone call, the Lebanese Foreign Ministry said on X.
Lebanon’s Iran-backed Hezbollah played a major part propping up Syria’s ousted President Bashar Assad through years of war, before bringing its fighters back to Lebanon over the last year to fight in a bruising war with Israel – a redeployment which weakened Syrian government lines.
Under Assad, Hezbollah used Syria to bring in weapons and other military equipment from Iran, through Iraq and Syria and into Lebanon. But on Dec. 6, anti-Assad fighters seized the border with Iraq and cut off that route, and two days later, Islamist militants captured the capital Damascus.
Syria’s new Islamist de-facto leader Ahmed Al-Sharaa is seeking to establish relations with Arab and Western leaders after toppling Assad.
Iraqi intelligence chief discusses border security with new Syrian administration
BAGHDAD: An Iraqi delegation met with Syria’s new rulers in Damascus on Thursday, an Iraqi government spokesman said, the latest diplomatic outreach more than two weeks after the fall of Bashar Assad’s rule.
The delegation, led by Iraqi intelligence chief Hamid Al-Shatri, “met with the new Syrian administration,” government spokesman Bassem Al-Awadi told state media, adding that the parties discussed “the developments in the Syrian arena, and security and stability needs on the two countries’ shared border.”
