The reason why the government is against depegging against USDollars is all the export income of Oil and related products are received in US Dollars. Majority of the money in bank deposits are in US Currency. If all on a sudden if they depegg, their assets in bank deposit will be valued less which will be a major loss to the Government. Instead what the Government is planning is wait for some time to see the US Currency getting stronger. To control inflation they are taking other measures like price control with the steel supplier, shopping mall etc..Hope this will clear your doubt...Have a gud day.
Fundamentally currency value depends on its own economic performance. But since QR is pegged with US dollar, QR value depending on US economic performance. If inflation or other indicators shows US economic weakness QR will automatically follow that no matter how strong Qatari economy is. or it is imported problem.
Why no depegging: i understand it is political decision rather than monetary policy. Government seems does not want to fall out from US protection.
Disadvantage: if the Riyal achieves a higher value, the Government of Qatar will have less income (in Riyals), because the oil- and gas exports will still be paid back in Dollar.
In short, the Riyal will have more buying power in the market. Items may cost less, and you will have a better exchange rate will your home currency. Of course, this depends on the economic future of Qatar, and the Gulf region. Right now, the currency is undervalued. When the time comes to un-peg, things might be different. There are a lot of in's and out's.
If Qatar depeg, the Qatari Rial will be more worth against other Currencies and all product will be cheaper. If you send money to another Country the money will be more worth.
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The reason why the government is against depegging against USDollars is all the export income of Oil and related products are received in US Dollars. Majority of the money in bank deposits are in US Currency. If all on a sudden if they depegg, their assets in bank deposit will be valued less which will be a major loss to the Government. Instead what the Government is planning is wait for some time to see the US Currency getting stronger. To control inflation they are taking other measures like price control with the steel supplier, shopping mall etc..Hope this will clear your doubt...Have a gud day.
Fundamentally currency value depends on its own economic performance. But since QR is pegged with US dollar, QR value depending on US economic performance. If inflation or other indicators shows US economic weakness QR will automatically follow that no matter how strong Qatari economy is. or it is imported problem.
Why no depegging: i understand it is political decision rather than monetary policy. Government seems does not want to fall out from US protection.
Disadvantage: if the Riyal achieves a higher value, the Government of Qatar will have less income (in Riyals), because the oil- and gas exports will still be paid back in Dollar.
In short, the Riyal will have more buying power in the market. Items may cost less, and you will have a better exchange rate will your home currency. Of course, this depends on the economic future of Qatar, and the Gulf region. Right now, the currency is undervalued. When the time comes to un-peg, things might be different. There are a lot of in's and out's.
Most of the people know the advantages. I want to know the disadvantages of riyal depeg from the dollar due to which govt. is not willing to do it.
the fixed rate between Dollar and Riyal is 3.65. If Qatar depegs its currency it will be floating and the "real" value will show up sooner or later.
If Qatar depeg, the Qatari Rial will be more worth against other Currencies and all product will be cheaper. If you send money to another Country the money will be more worth.
what do you mean if Qatar deprec to the Dollar.. Can you please explain???