The UK’s Lloyds Banking Group has stopped trading Qatari riyals for retail customers, as the extended diplomatic crisis in the Gulf puts growing pressure on the currency.
Lloyds Bank, Bank of Scotland and Halifax have all stopped buying and selling the currency because the third-party supplier that fulfils their foreign exchange service has stopped trading in riyals, the bank said in a statement.
Qatar’s central bank told Reuters earlier today that reports of halted trading in the currency were “baseless”, but Lloyds’ decision follows a similar move from the Post Office, one of the UK’s main high street currency exchange providers.
The Post Office stopped trading in riyals earlier this month, and a spokesperson for the company on Friday said “many foreign currency providers have temporarily stopped trading in Qatar riyals, meaning that the currency is not currently available at Post Office branches”.
The moves reflect the growing difficulties being caused by the Saudi and UAE-led blockade of Qatar. Four of the kingdom’s Arab neighbours severed diplomatic ties and cut travel links to Qatar earlier this month, alleging that the government sponsors terrorism.
The central bank has insisted that the blockade – which led Saudi and Emirati financial groups to suspend business with Qatar – poses no threat to its long-standing currency peg against the dollar.
However, low liquidity in spot markets mean institutions have been forced to trade the riyal outside its normal range around 3.64 per dollar. Earlier this week it traded as low as 3.7884 – its weakest level on record according to Bloomberg data going back to 1988 – and at publication time was around 3.7399.