Qatar's currency has come under pressure as Gulf Arab commercial banks start holding off on business with Qatari banks because of a diplomatic rift in the region.
Banking sources said some banks from Saudi Arabia, the United Arab Emirates and Bahrain delayed letters of credit and other deals with Qatari banks after their governments cut diplomatic ties and transport links with Doha yesterday, accusing Qatar of backing terrorism.
Saudi Arabia's central bank advised banks in the kingdom not to trade with Qatari banks in Qatari riyals, the sources told Reuters news agency.
Qatar has dismissed the terrorism charge and welcomed a Kuwaiti mediation effort.
Doha, the world's biggest liquefied natural gas exporter, says it has enough reserves to support its banks and its riyal currency, which is pegged to the dollar.
Qatari banks have been borrowing abroad to fund their activities.
Their foreign liabilities ballooned to 451 billion riyals (€110 billion) in March from 310 billion riyals at the end of 2015, central bank data shows.
So any extended disruption to their ties with foreign banks could potentially threaten a funding crunch for some Qatari banks.
Banks from the UAE, Europe and elsewhere have been lending to Qatari institutions.
Gulf banking sources, who declined to be named because of political sensitivities, said Saudi Arabian, UAE and Bahraini banks were postponing deals until they received guidance from their central banks on how to handle Qatar.
"We will not take action without central bank guidance, but it is wise to evaluate what you give to Qatari clients and hold off until there is further clarity," said a UAE banker, adding that trade finance had stalled for the time being.
The sources said the UAE and Bahraini central banks had asked banks under their supervision to report their exposure to Qatari banks.
With an estimated $335 billion of assets in its sovereign wealth fund and its gas exports earning billions of dollars every month, Qatar has enough financial power to protect its banks.
"We are watching the financial sector very closely. If the market needs liquidity, the central bank will definitely provide liquidity," a Qatari central bank official told Reuters.
