Doha’s wealth fund eyes European banks

Doha: Qatar’s prime minister has urged Gulf oil producers to bridge differences over a single currency, saying monetary union could avert possible unilateral revaluations designed to check soaring inflation. Qatar’s dollar-pegged riyal is undervalued by as much as 30 per cent and currency revaluation is being studied, among several options, to check inflation, Shaikh Hamad Bin Jasem Bin Jabr Al Thani said in an interview late on Saturday. Inflation in the richest Arab country by per capita hit 13.74 per cent in the fourth quarter. “It’s now the time for the Gulf to have its own currency,” Shaikh Hamad said in the Qatari capital, Doha. “We are thinking about it and in talks … we are discussing with Gulf countries, but there is no consensus.” Qatar, the world’s largest exporter of liquefied natural gas, would prefer to make any change to its currency policy in concert with Saudi Arabia and its other Gulf partners preparing for monetary union as early as 2010, Shaikh Hamad said. “We prefer always to act with all the GCC countries,” said Shaikh Hamad, whose country currently chairs the six-nation Gulf Cooperation Council that includes the UAE and Kuwait. Asked how long Qatar could continue with its existing foreign exchange regime, he said: “We cannot give a time. It is something that we have to see how it goes and look at where the dollar is going.” Dollar pegs force Gulf oil producers to shadow US monetary policy at a time when the Federal Reserve is cutting rates to ward off recession and the Gulf economies are booming on a near five-fold jump in oil prices since 2002. Policy differences Rifts in Gulf monetary policy widened in May when Kuwait broke ranks with its neighbours by severing its dollar peg in favour of a basket of currencies, saying a weak dollar was driving imported inflation. Oman has said it will not join a single currency at all, and UAE Central Bank Governor Sultan Nasser Al Suwaidi said in November he was under mounting social and economic pressure to drop the peg. The GCC “should have a currency with a good weight internationally,” Shaikh Hamad said. “The GCC now is capable to do this and have a separate currency.” Doha (Reuters) Qatar’s prime minister, who heads the country’s sovereign wealth fund, said he favours investing in European over US lenders because US bank stocks are likely to fall further on subprime-mortgage writedowns. Qatar, which bought “under” two per cent of Credit Suisse, is looking to spend between $10 billion and $15 billion over the next two years on bank stakes to diversify the country’s economy from oil and natural gas, Shaikh Hamad Bin Jasem Al Thani said in an interview in Doha. “In the United States, we need to wait a little,” Shaikh Hamad said late on Saturday. “We think there are still problems with the banks.” In contrast, state-run Kuwait Investment Authority, which has at least $225 billion in assets, said last month it would invest $3 billion in Citigroup Inc and $2 billion in Merrill Lynch & Co as the two US banks scrambled for capital after billions of dollars in writedowns. Saudi Prince Al Waleed Bin Talal is also investing in the two, but has not said how much. “We are active in international markets and in wherever we find a good opportunity … in property, financial or industrial,” Shaikh Hamad said, declining to be more specific. The Qatar Investment Authority (QIA), whose assets Standard Chartered puts at $60 billion, is considering making an investment in Britain’s second-biggest bank, the Royal Bank of Scotland (RBS), The Sunday Telegraph newspaper reported, citing people familiar with the QIA’s plans. Shares in RBS were up 7.2 per cent at 1001 GMT. A spokeswoman for RBS declined to comment yesterday on the newspaper report. In January, The Sunday Telegraph was the first to report Qatar’s interest in Credit Suisse, saying the QIA was looking to build a five per cent stake in the Swiss lender. “Up to now, I think it is under two per cent, but, of course, when we reach the legal point where we have to declare, we will do so,” Shaikh Hamad said of his Credit Suisse shares. The threshold for public disclosure is three per cent. “We are buying them for the long-term strategic holding, and it’s not for selling,” he said. Source: Reuters