Doha: Qatar Central Bank (QCB) data, released yesterday, indicated a significant increase in international reserves and foreign currency liquidity at the Central Bank. The data showed QCB’s international reserves rose to the level of QR201.3bn by the end of March 2020, Al Byraq Center for Economic and Financial Studies noted in its weekly analysis.
International reserves consist of four main components: bonds and foreign treasury bills, deposits and cash balances with foreign banks, in addition to gold holdings of the Central Bank, special drawing rights (SDR) deposits, and Qatar’s share in the IMF. Other foreign currency liquid assets (not included in the Bank’s official reserves) are added to the international reserves.
The QCB’s official reserves rose by QR90m ($24.7m) to about QR147.14bn ($40.40bn) in March 2020, compared to the previous month. Total international reserves, with liquidity in foreign currency at the Bank at the end of March from the previous month, increased by about QR90m (about $24.7m) to reach about QR201.3bn ($55.2bn), thus increasing by about QR63.6bn, or 46.2 percent of what it was at the end of March 2018, and increased by 9.7 percent compared to the end of March 2019.
Further details also show that the official reserves, which increased during the month of March 2020 to the level of QR147.14bn, was as a result of the rise in bonds and treasury bills at the Qatar Central Bank by about QR6.2bn, to reach QR88.1bn, and the rise in gold stocks by about QR0.2bn to QR8bn, and a decrease in balances with foreign banks by about QR6.2bn to QR49.2bn, in addition to the stability of SDR deposits with the share of the State of Qatar in the cash fund, at the level of QR1.88bn.
When compared on annual basis with March 2019, the international reserves and liquidity of the Bank witnessed an increase of about QR17.8bn, or 9.7 percent to QR201.3bn at the end of March 2020.
This increase was distributed among some components of the international reserves of the bank, as follows: The bank’s portfolio of foreign bonds and treasury bills increased by about QR32.4bn, or 58.2 percent, to QR88.1bn. The bank’s balances with foreign banks decreased by an approximately QR9.7bn, or 16.5 percent, to QR49.2bn.
The QCB’s gold holdings increased by QR2.34bn, or 42 percent, to QR8bn. Stabilization of SDR deposits, and the state’s share with the International Monetary Fund stood at QR1.88bn.
On the other hand, other liquid assets - other than official reserves - (i.e. deposits in foreign currencies) decreased by about QR7.1bn to QR54.2bn by the end of March 2020 compared to March 2019.
“Available comparisons suggest that Qatar Central Bank has international reserves and a large foreign currency liquidity that has placed it in a very comfortable position to maintain the stability of the Qatari currency, regardless of artificial pressures. We note that these reserves and liquidity in foreign currency are equivalent to more than eleven times the issued cash, or more than 1100 percent, while the Bank’s law requires that the percentage of not less than 100 percent only.
It is also noted that these reserves are more than twice the reserve money - the so-called monetary base - with a coverage ratio of more than 234 percent”, Bashir Al Kahlout, Economic Consultant and Director at Al Byraq Center for Economic and Financial Studies told The Peninsula. As for the adequacy of reserves and liquidity to cover Qatari imports, it already covers commodity imports for more than 19 months, and nearly ten months of imports of both goods and services, he said.
