Qatar says liquidity sufficient to overcome any war stress

• Central bank reassures markets
• System in ‘position of strength’
• Bank customers can defer payments

The Qatar Central Bank (QCB) has confirmed that domestic liquidity remains strong and that capital buffers exceed regulatory requirements, despite the month-long US-Israel conflict with Iran.

Banks hold substantial liquidity – cash and short term instruments – in both domestic and foreign currencies, sufficient to meet customer demand and any short-term funding pressures under stressed conditions, the central bank said in a statement.

The financial system is operating from a position of strength, it said, adding that the banking system showed resilience during prior periods of global market stress.

“The current conditions do not change that underlying strength,” QCB said.

Given that the external environment remains uncertain, the central bank has introduced precautionary measures, including reducing the reserve requirement on deposits to 3.5 percent from 4.5 percent, thereby releasing additional liquidity.

The QCB will offer unlimited Qatari riyal (QAR) repurchase facilities against eligible securities held by banks to maintain QAR liquidity in the local market.

QCB will allow banks to offer customers impacted by the conflict the possibility to defer loan principal and interest payments for up to three months.

The UAE and Kuwait have announced stimulus packages for banks to spur lending and offset economic damage caused by the conflict.

Further reading:

• Gulf insurers have ‘low exposure’ to war-related claims
• Gulf leaders project resilience but warn of global fallout from war
• US helium distributor calls force majeure after Qatar LNG attack

The defence ministry said on Sunday that Qatar had intercepted all drones launched from Iran.

However, Ras Laffan – the world’s largest LNG export hub, accounting for about 20 percent of global supply – was struck earlier this month.

The shock affected about 17 percent of Qatar’s LNG export capacity, causing an estimated $20 billion in annual revenue losses and threatening supplies to Europe and Asia, QatarEnergy CEO Saad Al-Kaabi said.

Ras Laffan also supplies nearly 30 percent of UAE gas demand via its Dolphin pipeline, a joint venture between Mubadala, Occidental Petroleum and Total.