Traders monitor screens displaying stock information at Qatar Stock Exchange in Doha, Qatar June 5, 2017. REUTERS/Stringer
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Economic sanctions and poor liquidity have created chaos in the foreign exchange market for Qatari riyals, with the currency trading far below its peg to the U.S. dollar this week, but bankers in the region believe the peg remains solid.At times, the riyal has been quoted by Qatari banks very near its peg of 3.64 to the dollar; at other times, foreign banks have quoted it much lower. This week it traded between banks as low as 3.81, more than 4 percent below its peg – the lowest level this decade.Many Gulf banks have suspended or reduced ties with Qatar, causing funds in the market to flow more slowly and inefficiently between onshore and offshore banks. This has opened a chasm between onshore trade, where the Qatari central bank has continued to provide ample supplies of dollars at a rate of up to 3.6415 under its peg mechanism, and offshore trade, where jittery foreign banks are demanding a premium for buying riyals, pushing the currency lower.The central bank has privately told Qatari banks, however, that it is committed to the peg, a Qatari commercial banker told Reuters.
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