Qatar's currency peg here to stay

The formal framework of the Central Bank’s policy remains unchanged with the exchange rate fixed at QAR 3.64/$1. Local commercial banks and exchange houses must deal with the public at the exchange rate set by the Central Bank, with the addition of a small margin of 0.24 per cent. The Central Bank’s clear and uncompromising restatement of its commitment to the dollar peg would appear to be something of a reversal of position from comments made earlier in the year. Asked in May by Reuters which economic conditions needed to be met for Qatar to consider changing its currency regime, Central Bank Governor Sheikh Abdullah bin Saud al-Thani said, "With increasing integration in international trade, services, and asset markets, a higher degree of exchange rate flexibility may become more desirable to ensure external stability and international competitiveness of our exports. "Moreover, our financial markets would have to deepen and develop further in order to provide the appropriate instruments for hedging of risk in a more flexible exchange rate environment." His comments marked the first time a senior official in Qatar had publicly suggested that the country may one day change its dollar peg, although he emphasised at the time that no change was currently envisaged.