The Qatari Riyal plunged to record lows (and forward FX markets indicate the peg is doomed) as Bloomberg reports Saudi Arabia’s central bank has ordered lenders in the country not to increase their exposure to any Qatari clients amid the worst crisis in relations among the Gulf Arab monarchies in decades, according to people familiar with the matter.
The Saudi Arabian Monetary Agency also told banks licensed in the country that they should not process any payments denominated in Qatari riyals, the people said, asking not to be identified because the information is private.
The order to refrain from increasing exposure to Qatar is being applied to include treasury investments, loans, letters of credit and trade-finance facilities, the people said.
Saudi Arabia is among countries including the United Arab Emirates, Egypt and Bahrain, that have blocked transport routes with Qatar, accusing the country ofdestabilizing the region through supporting proxies of Shiite Muslim Iran and the Sunni militants of al-Qaeda and Islamic State.
Some banks in Saudi Arabia, the U.A.E. and Bahrain have already begun cutting their exposure to Qatar, other people said on Wednesday.