Qatar Central Bank Still Backs Riyal-Dollar Peg, Governor Says
Qatar’s central bank governor said his country hasn’t changed its support for pegging the riyal to the U.S. dollar after Reuters reported that the bank’s director of research urged a more flexible exchange rate.
“He is not reflecting the central bank,” Governor Abdullah Saud Al Thani said in a phone interview, referring to the remarks by research director Khalid Alkhater.
A “more flexible exchange rate” than the dollar peg would be better for managing inflation risks over the next 10 years, Alkhater said in prepared remarks for a conference, according to a Reuters story carried by the Gulf Times.
The peg limits the ability of central banks to set independent monetary policy. Kuwait is the only member of the six-member Gulf Cooperation Council, which also includes Saudi Arabia, Bahrain, the United Arab Emirates and Oman, that doesn’t peg its currency to the U.S. dollar.
Qatar hasn’t altered its benchmark interest rate since August 2011, when it cut the overnight lending rate 50 basis points to 4.5 percent, the second reduction in a year.
The Qatari currency traded at an average of 3.641 riyals to the dollar over the past year, according to data compiled by Bloomberg.
Qatar, the world’s biggest producer of liquefied natural gas, plans to invest $200 billion in infrastructure projects such as roads, stadiums, hotels and a rail network, before hosting the soccer World Cup in 2022. Inflation in the country accelerated to an annual 3.7 percent in April, the fastest rate since at least February 2010, when Bloomberg started keeping records.
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