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Qatar riyal firms against dollar in forward market

Qatari CDS hit one-year high after ultimatum issued

LONDON, June 27, (RTRS): The Qatari riyal strengthened against the dollar on Tuesday in the forward market, following two days of sharp falls caused by the continued standoff between Doha and neighbouring Arab powers. One-month riyal forwards showed the currency marked as firm as 3.751 per dollar, according to Reuters data, after hitting a low of 3.793 on Monday.

Three-month forwards also saw the riyal firming up to 3.755 compared to the previous day’s low of 3.796. Qatari assets had come under pressure since Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a boycott on Qatar three weeks ago. The four Arab powers accuse Doha of backing militants and issued an ultimatum over the weekend, including demands that Qatar shut down a Turkish military base.

Meanwhile, the cost of insuring exposure to Qatari sovereign debt rose to a one-year high on Monday after neighbouring Arab states, which have imposed sanctions on Qatar, issued an ultimatum, giving Doha 10 days to comply.

Five-year credit default swaps (CDS) for Qatar rose 4 basis points (bps) from Friday’s close to 115 bps, according to IHS Markit data, the highest level since last June. Saudi Arabia, Egypt, the United Arab Emirates and Bahrain are amongst those who have severed ties with Doha, accusing it of supporting terrorism.

The 13-point ultimatum to Qatar includes closing of the Al Jazeera satellite television network, curbing relations with Iran, shutting a Turkish base in Doha and paying reparations.

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