Qatari Drama Unfolds in Global Currency Markets

ForexFraud
Brought to you by: ForexTime LogoYour capital is at risk

ForexTime Staff Writer, Samantha Robb, discusses the global impact of the pending Qatari crisis.

On the morning of Monday, June 5, Middle East tensions spilled over to the global scene and set the theme for the week to come. Saudi Arabia, the United Arab Emirates, Bahrain, Egypt and Yemen are to cut off all ties – land, air and sea – with Qatar following rumours that the country has been actively supporting terrorism.

In matters of context, things have been stirring up in the Middle East for more than a decade as the Emir of Qatar failed to gain favour with any of the neighbouring countries, ostensibly because of his foreign policies. Policies that mainly featured Saudi Arabia’s Shia opponent, Iran.

The lines have now been crossed to a point that, apart from no longer allowing any trades or air travel between the opposing regions, all citizens residing in GCC member states have been given two-week’s notice to leave and citizens of those countries are no longer allowed to travel to Qatar. Mauritius, Mauritania, the Maldives and Yemen have also joined the ban, severing all bonds with Qatar.

Qatar’s exile has not gone by unnoticed by currency markets. On Friday, June 9, the Qatari Riyal traded on the futures market at twelve-month lows. The fact both Moody and S&P downgraded Qatar’s credit rating from AA3 to AA2 and AA to AA- respectively, did not soften the blow. The agency downgrades show that the international community strongly disapprove of the developments and they have diminishing confidence in Qatar’s economic position.

The greenback reached twelve-year highs against the currency last week and despite being pegged to the dollar the Riyal was down at 3.6526. Ongoing drops in oil prices and uncertainty over long-tern sustainability of energy revenues in the region, are also playing a major factor in investor confidence. The S&P’s downgrade went as far as putting the currency on CreditWatch, a not-so-surprising twist as portfolio investment funds have been leaving the country at a swift pace. More recently, on Monday 12, Fitch announced it was reclassifying Qatar as Ratings Watch Negative (RWN).

Forex trading markets are also reacting to the ban, with Pakistani traders now refusing to buy the Riyal. In addition, number of Sri Lankan banks have also dropped the currency.

What happens next is certainly something that all of us at FXTM are keeping an eye on. If more regions follow suit, the situation will look rather grim for Qatar and they will eventually need the government to find alternative trade routes. On the other hand, Qatar might be willing to wait out the storm as the government has $337 billion in its sovereign wealth fund and currently holds the reins to crucial gas and oil fields. They are also the world’s largest LNG exporter.

Disclaimer: The content in this article comprises personal opinions and ideas and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.


ForexFraud

Latest news

AUD/USD Pair Dips 0.45% in Markets, COVID Panic Grips
The US dollar continued a week of surges in lots of its key pairs after the coronavirus pandemic placed itself firmly back on the agenda. Read more
EUR/GBP Eyeing 0.9282 Level on the Forex Price Charts
The pair containing the single European currency and the British pound has been closely watched in recent weeks. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2012 Global CFD and FX broker
Number One Broker
Best FOREX BROKER Visit broker
5
#2 Your capital is at risk Founded: 2012 Global Forex Broker
Number One Broker
Best Trading App Visit broker
5
#3 Forex Broker Pepperstone LogoYour capital is at risk Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
4.9
#4 Your capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
BEST CUSTOMER SUPPORT Visit broker
4.9
#5 BlackBull MarketsYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
4.8

    Forex Fraud Certified Brokers

    City Index Logo
    Exness Small Logo
    VantageFX Small Logo
    LegacyFX Small Logo
    Plus500 Small Logo
    ATFX Logo
    IQ Option Logo
    BlackBull Markets Small Logo
    Forex.com Logo
    Pepperstone
    XM Logo
    skilling logo
    Oanda Small Logo
    OctaFX Logo
    HYCM Logo
    FXTM Logo
    Oinvest Small Logo