QCB’s international reserves rise for 20th consecutive month

Qatar’s Central Bank’s foreign Currency Reserves continued grow for the 20th consecutive month and reached QR197.1bn in September 2019, according to QCB data issued yesterday.

Official Reserves consist of four main components: Bonds & Foreign Treasury Bills, Deposits & Cash Balances with Foreign Banks, Gold holdings of the QCB, SDR Deposits and Qatar’s share of the IMF.

In addition to the official reserves, there are other liquid foreign currency assets, which together constitute the total international reserves.

QCB’s Official Reserves rose by the end of September compared to the previous month by about QR 0.73bn, to reach QR142.15bn ($39bn). Thus, the total International Reserves, with liquidity in foreign currency rose at the end of September, by about QR65m to reach about QR 197.07bn (or $54.2bn), an increase by about QR50.77bn, or 34.7 percent from its level in the starting month of the siege in June 2017, and increased by 16.5 percent since September 2018.

In more details, we found that International Reserves rose during September 2019 compared to last August, and that was the result of an increase of the QCB balances of Deposits with Foreign Banks by about QR1652m, to reach the level of QR54.1bn, while the other items declined. The balances of Bonds and Foreign Bills declined by about QR800m to QR 78.8bn, and the value of Gold fell by about QR115m to QR 7.4bn, and the balances of SDR Deposits remained stable, slightly down at the level of QR 1870m.

According to the annual comparison with September 2018, the QCB’s International Reserves and Liquidity witnessed an increase of QR 27.9bn; or 16.5 percent to QR 197.07bn. The increase was distributed among some components of the Bank’s international reserves as follows: 1- The QCB’s portfolio of Foreign Bonds and Treasury Bills increased by about QR 39.9bn or 102.4 percent.

2- The QCB Balances with Foreign Banks increased by about QR371m, or up to 0.7 percent.

3-The QCB’s Gold holdings increased by more than QR3bn, or 69.8 percent.

4- SDR Deposits and the State’s Share in the IMF, increased by about QR479.4m, or 34.5 percent.

In the other side, Liquid Assets – other than Official Reserves – (i.e. Foreign Currency Deposits) declined by QR15.8bn to QR54.8bn from that of September 2018.

Available comparisons suggest that QCB 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 any artificial pressures. We noted that these Reserves and Foreign Currency Liquidity are equivalent to more than eleven times the Issued Currencies, or more than 1100 percent, while the QCB’s law requires that the percentage should not be less than 100 percent only. These Reserves are more than twice the reserves – the so-called Monetary Base – with coverage of more than 234 percent.

As for the adequacy of the 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, noting that the international standard in this regard is limited to covering it for three or four months only.

(The views published in this column are those of the author and do not necessarily represent or reflect the views of The Peninsula)

Source from: The Peninsula