Qatar accuses UAE bank of 'financial warfare'

Qatar accuses UAE bank of 'financial warfare'
Qatar has accused a UAE bank of trying to crash its currency through offshore trading, in an attempt to damage the economy of the Gulf state.
2 min read
18 March, 2018
Qatar has been under blockade since June [AFP]

Qatar has accused a UAE bank of attempting to damage its economy through a series of bogus off-shore foreign exchange transactions, Reuters has revealed.

Central Bank of Qatar's (CBQ) legal team sent a letter to the US treasury asking it to investigate NBAD Americas - the US subsidiary of largely state-owned First Abu Dhabi Bank (FSB) - about attempts to manipulate the Qatari riyal.

"We believe NBAD has participated in an extraordinary and unlawful scheme to wage financial warfare against Qatar, including through the manipulation of Qatari currency and securities market," the letter said, according to Reuters.

FAB said it upholds the highest ethical standards and abides by laws and regulations, the news agency reported.

"As the UAE's largest bank and one of the world’s largest and safest financial institutions, First Abu Dhabi Bank (FAB) works closely with all of its regulators in the markets in which it operates, to sustain and uphold the high standards of governance and regulatory compliance across the group," the bank said. 

Qatar has accused the UAE before of attempting to ruin its economy and waging "financial warfare" against Doha last year.

This was done through offshore transactions of the Qatari riyal to give the impression traders were losing confidence in the riyal and that Doha's economy was struggling, Reuters reported.

After being pegged to the dollar at 3.64 for more than a decade, the currency suddenly weakened to 3.89 offshore at one point last year, before recovering.

These transactions were timed to coincide with important national holidays such as Eid al-Adha, "[thus] reinforcing the manufactured narrative that Qatar's currency was increasingly volatile and its economy was too unstable for investment", the letter to the treasury said.

The bank's lawyers claim that NBAD were offering rates for the Qatari riyal lower than the official one of 3.64, but when approached for sales told prospectors they had no more riyals to trade.

Qatar has around $300 billion in reserves and sovereign wealth funds, giving it easily enough financial strength to thwart off attacks on its currency.

Qatar has been under blockade since June by neighbours Saudi Arabia, Bahrain, the UAE and Arab power Egypt.

The four states accuse Doha of sponsoring terrorism and being too close to Iran, claims that Qatar strongly denies.

Doha believes the four states are trying to make a vassal of regional powerhouses Saudi Arabia and the UAE, due to its independent foreign policy and being home to media giant Al Jazeera.