Arab Today, arab today qatar rates cut to bolster credit bank sector
Last Updated : GMT 01:25:55
Arab Today, arab today
Arab Today, arab today

Qatar rates cut to bolster credit, bank sector

Arab Today, arab today

Arab Today, arab today Qatar rates cut to bolster credit, bank sector

Doha - Arabstoday

Qatar lowered key interest rates a day earlier to spur activity in the local banking sector and revive private sector credit growth, the central bank said on Thursday. The world\'s largest liquefied natural gas exporter on Wednesday cut both the overnight lending facility and the repo rate to 4.5 percent from 5 percent previously, and reduced the deposit rate to 0.75 percent from 1.0 percent.\"It comes in line with the economic developments that the country is seeing and the expected investment spending on infrastructure projects, and future real estate projects,\" the central bank said on its website.The cuts followed an April policy measure which the bank said was aimed at stimulating banking activities and boosting lending to the private sector. Analysts said they saw room for even further cuts. \"There is definitely scope for a further cut, the benchmark lending rate is 4.5 percent in Qatar and the benchmark rates in the UAE and Saudi are 2 percent and in the US it is 0.25,\" said Khatija Haque, senior economist at Emirates NBD in Dubai. \"We could see another 25 bps cut in the deposit rate as well. It depends on how deposit growth develops in the coming months.\" Qatar, like all but one Gulf Arab oil exporters, pegs its currency to the US dollar. The US Federal Reserve promised to keep interest rates near zero for at least two more years on Tuesday.\"The timing of the cut is also likely to have been supported by the US intention to keep its federal funds target rate at exceptionally low levels at least through mid-2013,\" EFG Hermes wrote in a note.EFG Hermes said there was room to reduce the lending rates from the current 4.5 percent by another 50 bps as inflationary pressure remains muted. Private sector credit rose by 15.8 percent year-on-year at the end of June after 15.0 percent in May, central bank data showed, although still well below double-digit rates of over 20-40 percent seen in the first half of 2009. At 0856 GMT, Qatar\'s benchmark index dipped 0.2 percent, but traders said the impact on the spot and currency markets was minimal.\"In the spot market and in the forex swap market there won\'t be any impact whatsoever ... There has been no material dealing,\" said Lyndon Loos, head of forex trading for Middle East and North Africa at Standard Chartered in Dubai.\"The changes to the interest rates affect the onshore banks, and not the offshore. The reducing of the repo rate means the lending rate to customers locally becomes cheaper,\" he said.Qatari one-year currency forwards were quoted at -20 par, moving only slightly to the left from -15/+5 before the cuts. Liabilities of Qatari banks to their foreign counterparts stood at QR89.2bn ($24.5bn) in June, below QR100.9bn in May, central bank data also showed. Qatar, one of the world\'s top investors through its sovereign wealth fund and host of the 2022 soccer World Cup, has like the UAE escaped unrest sweeping through the Arab world. From / Arabian Business News

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Arab Today, arab today qatar rates cut to bolster credit bank sector Arab Today, arab today qatar rates cut to bolster credit bank sector

 



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