Recent data from the Qatar Central Bank stated that Qatar’s foreign reserves witnessed a marginal surge in January, recording $71.95 billion. The figures, released at the end of last month, indicated a steady increase in international reserves and foreign currency liquidity of the country.
A notable report point is that Qatar has recorded a substantial 12.8 percent month-on-month increase in gold investments, and currently the amount invested in gold stands at $18.13 billion, the highest during all times.
Such an increase in reserves highlights the increasingly strong financial standing of Qatar that will be reflected in the December figures of other Gulf Cooperation Council nations.
The GCC countries, which peg their currencies against the US dollar, normally make their monetary policies similar to those of the Federal Reserve.
The accumulation of foreign reserves plays a vital role in sustaining the stability of these currency pegs, liquidity management, and the protection of exchange rates, particularly in times of global financial insecurities.
However, the report also showed that there was a drop in the investments in foreign treasury bonds and bills, which had decreased by 9 percent month on month to about $30.1 billion, the lowest number in five years.
Conversely, the overall balances that the bank had in foreign banks increased by 18.7 percent to stand at 5.92 billion, the highest in 10 months.
Qatar News Agency reported that the QCB’s international reserves and foreign currency liquidity witnessed a year-on-year increase of 2.65 percent in December, reaching $71.7 billion.
This pattern of increasing foreign reserves is not unfamiliar to Qatar. The foreign reserve assets of Saudi Arabia have experienced a significant growth of 5 percent in November to reach $463.6 billion, which is an indication of a tendency of the region to build financial reserves.
Moreover, the economic sustainability of Qatar is still acknowledged internationally. Fitch Ratings had reaffirmed the country’s credit rating of the country as “AA” in March, based on its growing ability to produce liquid natural gas and the large per capita income.
The rating indicates good fiscal standing of Qatar as the country has one of the highest GDPs per capita in the world and has a loose public finance system that strengthens its economic stability.
The rating of “AA” indicates an extremely low risk of credit and a great capacity to fulfill the financial obligations despite the economic difficulties that may occur. This rating is consistent with a larger regional trend in diversifying the economies of nations in the Middle East so that there is less reliance on oil revenues.
