Qatar has seen a cumulative 4.75% or 475 basis points hike in interest rates since January 2022 after the central bank effected a 0.25% or 25 basis points increase in its key rates in view of the US Federal Reserve revising its reference rate in similar proportion.
The Qatar Central Bank (QCB) on Wednesday increased the repo rate, deposit and lending rates by 25 basis points.
The repo rate in Qatar has increased by a cumulative 4.75% or 475 bps from the beginning of 2022. Since January 2022, QCB repo rate has risen from 1% to 1.25% in March, then to 1.75% in May, 2.5% in June, 3.25% in July, 4% in September, 4.75% in November, 5.25% in December, 5.5% in March and the 5.75% in May 2023.
In 2022, the average repo rate was 2.77% and it was 1% in 2021.
The increasing repo rate comes in view of the fixed exchange parity with the greenback; otherwise higher-yielding dollar-based investments could put downward pressure on the local currency, market sources said, adding it may lead funds flow to bank deposits with higher returns and lower risk.
The QCB lending rate has cumulatively increased by 3.5% or 350bps from the beginning of 2022. It was seen jumping from 2.5% in January to 2.75% in May, 3.25% in June, 3.75% in July, 4.5% in September, 5% in November, 5.5% in December, 5.75% in March and the latest 6%. The average lending rate in 2021 was 2.5%.
On credit facilities, the interest rate (weighted average) on loans less than one year was seen increasing to 6.27% in February 2023 against 3.82% in February 2022; on loans from one to three years to 6.91% (3.56%); on loans of three years and above to 6.67% (4.03%).
Similarly, the QCB deposit rate has cumulatively jumped by 4.5% or 450bps, increasing from 1% in January 2022 to 1.5% in May, 2.25% in June, 3% in July, 3.75% in September, 4.5% in November, 5% in December 2022, 5.25% in March 2023 and 5.5% in May 2023. The average deposit rate stood at 1% in 2021.
In terms of customer deposits, time deposits of one-month was seen surging to 4.04% in February 2023 compared to 1.05% in February 2022; three-month deposits to 5.05% (1.51%); six-month deposits to 5.34% (1.76%); one-year to 4.31% (2%) and more than one year to 3.97% (1.86%).
The weighted average overnight interbank interest rate (on riyal) stood at 5.02% in February 2023 compared to 0.37% in February 2022.
The overnight rates noticeably shot up from July 2022 since it was much less than 1% in January-June 2022. In July, it was 1.68% from when it began zooming to 2.62% in August, 2.61% in September, 3.7% in October, 4.31% in November, 4.68% in December, 4.97% in January 2023 and 5.02% In February 2023.
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