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Tue 26 Jul 2011 06:23 PM

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Qatar confident US debt solution will be found soon

Central bank governor says solution to financial dilemma likely to be found within a week

Qatar confident US debt solution will be found soon
US President Barack Obama. The country is edging closer to a default as debt talks flounder.

Qatar's central bank governor Sheikh Abdullah bin Saud al-Thani is optimistic that a solution to the US debt crisis can be agreed within a week, he was quoted as saying on Tuesday.

Qatar and other Gulf Arab states are major holders of US Treasuries and Sheikh al-Thani was quoted by Doha-based Al Arab newspaper as saying Washington would be able to find a solution to the financial dilemma within the next seven days.

The United States edged closer to a devastating default as Republicans and Democrats were deadlocked over competing plans to raise the debt ceiling, one week before an August 2 deadline to act.

Other central bank officials in Saudi Arabia, the UAE, Kuwait and Qatar were not immediately available for comment on their views on the US debt crisis. Bahrain's central bank declined to comment.

An official at Oman's central bank said in June the bank had started to actively discuss a potential U.S. debt default and feared such a move would, at least briefly, destabilise Gulf Arab foreign asset reserves.

OPEC member Qatar held foreign reserves worth QR70.5 billion ($19.4 billion) at the end of May, down 13.7 percent from 79.4 billion at the end of April, latest central bank data showed.

Gulf Arab states mostly peg their currencies to the US dollar and their main source of revenue, oil, is priced in dollars but they do not usually disclose the composition of their foreign currency reserves.

"I would assume there would be no major shift in reserves in the Gulf at this time," said Giyas Gokkent, chief economist at the National Bank of Abu Dhabi.

"It simply cannot be the case that suddenly central banks start switching and move to other currencies as reserves. The question is, even if you want to switch, what do you switch to?"

Al Arab also quoted Sheikh al-Thani as saying that inflation in Qatar was under control. Annual inflation edged up to 1.7 percent in May.

Analysts polled by Reuters in June forecast inflation in the world's top liquefied natural gas exporter would reach 3.2 percent this year.

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Anonymous 8 years ago

What do they know that the rest of us dont!!