Skip to content Skip to Search
Skip navigation

Qatari bank says US dollar ‘safe haven’ amid geopolitical risks

Creative Commons
The value of the greenback has recently risen against major currencies to levels not seen in almost two decades.

Qatar National Bank (QNB), the Gulf’s largest lender by assets, has described the US dollar as a “safe haven” instrument, especially in light of the geopolitical turbulence in Europe and Asia, the state-onwed Qatar News Agency reported, citing a weekly report by the lender.

It predicted that the advanced economies would likely remain in a more fragile growth tanjectory compared to the dollar, which will remain high for some time.

The value of the greenback has recently risen against major currencies, to levels not seen in almost two decades.

The Gulf’s currencies have been linked to the US dollar for decades: the Omani riyal since the 1970s, the Qatari riyal since mid-2001 and the Bahraini dinar and the UAE dirham officially since early 2002.

The latter three have effectively been linked to the American greenback since the 1980s, as has the Saudi riyal.

The Kuwaiti dinar was the exception, as in May 2007 it decided to shift its peg to a basket of currencies although the US dollar still accounts for 70-80 percent of the value.

The report said that the US Dollar Index had increased 10 percent since pre-pandemic levels, with more than 10 percent a year and 19 percent compared to the post-pandemic levels.

The dollar was supported by high demand from global investors at the beginning of the pandemic.

Soon after, the US dollar depreciated for six months between May 2020 and January 2021 against major currencies when the US introduced economic incentives faster than other economies.

Those moves later completely reversed their direction, which led to an even steeper rise in the value of the US dollar, registering an increase of 17 percent against the euro, 24 percent against the yen, and 13 percent against emerging market currencies.

The report attributed the developments in the dollar value to three main factors: US growth differentials were greater than other countries, expected real interest rates and benefits from the rising political and geopolitical risks threatening global economic conditions.