DOHA: Qatar’s central bank sought to reassure foreign investors on Thursday that they could change currencies freely, after equity index compiler MSCI said sanctions against Doha had made it more difficult for investors to obtain riyals.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Qatar in June, prompting many Gulf and other foreign banks to reduce their business with Qatari banks.

This has distorted the foreign exchange market, where onshore and offshore rates have diverged.

MSCI said on Wednesday that it might therefore shift to using offshore rates to value Qatar’s equities market. Since the riyal offshore often trades several percent weaker against the US dollar than onshore, the shift could lead to changes in the weighting of Qatari stocks in MSCI’s emerging market index.

The index compiler will take feedback from the investment community on the proposed shift until Dec 1, and will announce its final decision by Dec 5.

The prospect of a shift helped to push Qatar’s stock market down 0.7 per cent on Thursday.

After the close, the central bank issued a statement saying it was committed to providing all the currency requirements of investors, including local and foreign individuals and institutions, at the official exchange rates.

“There are no restrictions on all banking transactions including transfers,” it said, stressing that money transfers could move freely into and out of the country at the official exchange rates.

Published in Dawn, November 24th, 2017