Employees and clients at one of Qatar's numerous commercial banks
Courtesy Qatar Today

The Indian rupee was the principal currency until 1959, when the government replaced it with a special gulf rupee in an effort to halt gold smuggling into India. In 1966 Qatar and Dubayy jointly established a currency board to issue a Qatar-Dubayy riyal. In 1973 Qatar introduced its own riyal, which was pegged to the International Monetary Fund's (IMF--see Glossary) special drawing rights (SDR--see Glossary). The exchange rate is tied to the United States dollar at a rate of QR3.64 per US$1.00.

The Qatar Monetary Agency (QMA), established in 1973, has most of the traditional powers and prerogatives of a central bank. The QMA regulates banking, credit, and finances issues currency and manages the foreign reserves necessary to support the Qatari riyal. Unlike many central banks, the agency shares control over the country's reserves with what was in 1973 the Ministry of Finance and Petroleum. QMA does not act as the state's banker, which is the preserve of the Qatar National Bank (QNB).

QMA's long-time governor, Majid Muhammad al Majid as Saad, was replaced in January 1990 by Abd Allah Khalid al Attiyah, who had been general manager of QNB. The position of governor was upgraded to ministerial level, signaling a more assertive future role for QMA in the country's banking sector.

Banks give loans at rates between 7 and 9 percent, and they pay 7 percent on deposits. About fifteen local and foreign banks operate in Qatar. Two banks--Qatar Islamic Bank, licensed in 1989, and Qatar International Islamic Bank, licensed in 1990-- reflect a trend toward Islamic banking that started in Saudi Arabia.

Banking in the gulf has been vulnerable to the shaky regional security situation. As a result of the Iraqi invasion of Kuwait, banks in Qatar lost an estimated 15 to 30 percent of deposits in late 1990.

Data as of January 1993