Qatar ostracised by GCC – ING

News that three of the six GCC members cut diplomatic ties with fellow GCC member Qatar has come as a shock and sent QAR 12m forward points back to levels last seen in late  2015 explains the research team at ING.

Key Quotes

“It was not that long ago when academics were discussing the choice of exchange rate regime for the Gulf Co-operation Council (GCC) currency union. News yesterday that three of the six GCC members cut diplomatic ties with fellow GCC member Qatar has therefore come as a shock and sent QAR 12m forward points back to levels last seen in late  2015, when oil was struggling near $30/bl. The move to sever ties comes on the back of allegations of Qatar’s sympathies to extremism and to Iran. Typically moves in the GCC forwards prove short-lived. This may well be the case for Qatar who, despite running a 78% budget deficit and turning to international bond markets to finance government spending, have around US$350bn in their sovereign wealth fund held at the QIA. So at this stage we’re not looking for a major run on the GCC pegs, but this space bears watching. Washington’s stance to Qatar will be key.”