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Abu Dhabi, UAETuesday 19 June 2018

No ban on Qatari riyal exchange, Saudi says

The kingdom’s central bank says pilgrims from Qatar can exchange riyal normally

Qatari pilgrims in Saudi Arabia will be able to exchange currency normally. Fadi Al-Assaad / Reuters
Qatari pilgrims in Saudi Arabia will be able to exchange currency normally. Fadi Al-Assaad / Reuters

Saudi Arabia’s central bank said on Sunday it has not banned trading in the Qatari riyal after the country severed diplomatic ties with Doha more than two months ago and clarified that visiting Qatari pilgrims will be able to exchange their currency.

The banking regulator said it has not issued any instruction to financial institutions or exchange houses in the kingdom to that effect. Exchange of the currency can be done “normally through licensed banks and money changers, in addition to using ATMs", the Saudi Arabian Monetary Agency (Sama) said in a brief statement, carried by official news agency SPA.

Saudi Arabia, along with the UAE, Bahrain, as well as their North African ally Egypt cut diplomatic and transport ties with Qatar on June 5. They also ordered the expulsion of Qatari nationals. The quartet accuses the gas-rich nation of meddling into their internal affairs and supporting terrorism. Doha denies the charges. The Saudi Arabia-led bloc of Arab nations has presented a list of demands to Doha to resolve the crisis, the GCC's most serious since its creation in 1981.

Kuwait is leading the regional mediation efforts and senior diplomats from the UK, the US and Turkey also met Gulf leaders last month to push for a solution. Qatar has however refused to change its stance.

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Qatar's economy, its banking system and the trading in its currency have come under pressure since the onset of the crisis in June. Volumes in riyal trade have declined and some of the smaller currency exchanges in the region have altogether stopped trading Doha's legal tender. The Qatari riyal is pegged to the US dollar and has seen volatility as traders struggled to fill orders amid poor liquidity with some banks unwilling to do business on the currency, according to Reuters.

Saudi commercial bankers told the new agency in June that Sama had issued informal guidance, asking Saudi financial institutions to refrain from doing new business with Qatari banks. Many Saudi and UAE banks have pulled deposits from Qatar since the diplomatic rift. As a result, foreign customers' deposits at banks in Qatar shrank to 170.6 billion riyals (Dh171.9 billion) in June from 184.6bn riyals in May, according to the news agency.

The UAE and Bahrain central banks in June also asked banks in their respective jurisdictions to freeze the assets, deposits and accounts of individuals and entities that the quartet has declared sponsors of terrorism. The UAE regulator also asked the financial institutions to be extra vigilant in conducting business with six Qatari banks -- Qatar Islamic Bank, Qatar International Islamic Bank, Barwa, Masraf al-Rayan, Qatar National Bank and Doha Bank.

Saudi Arabia, which attracts millions of Muslims from around the world for the Hajj, has exempted Qatari pilgrims from the travel ban as a goodwill gesture. The kingdom’s national flag-carrier, Saudia, has allocated seven Boeing 777-300 aircraft to transport Qatari pilgrims from Qatar to King Abdulaziz International Airport in Jeddah. The departure flights will operate between August 22 to August 25, while return flights will commence on September 5, according to SPA.