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Posted On: 18 February 2010 10:21 am
Updated On: 12 November 2020 02:10 pm

As euro loses sheen, riyal gains

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It has been one of the strongest currencies of the world almost since its launch at the turn of the century. The charm of the European common currency, however, has lately been on the wane. Under pressure due to a yawning budgetary deficit in Greece, the Eurozone currency has of late been losing out in competition with the dollar. And since the Qatari riyal (QR) is pegged to a strengthening greenback, it has been gaining value against euro for the first time since the common currency was floated. The riyal has appreciated a record 10 percent against euro in the past two-and-a-half months thanks primarily to a firming up dollar. According to Trust Exchange, one euro was yielding QR4.97 at the exchange rate prevailing in the local foreign exchange market yesterday. “The rate was 5.47 on November 30, 2009,” said S B Lal, general manager of Trust Exchange which is managed by India’s largest public sector bank, the State Bank of India (SBI). The difference works out to 10 percent. The fall of the European common currency has been fast, since as recently as February 1, its exchange rate vis-à-vis the Qatari Riyal was 5.07, down from 5.23 since January 15 this year, Lal said. The greenback, on the other hand, has been firming up against euro due to some recovery in the US. That the euro has been under tremendous pressure as Greek’s budgetary deficit has reached an alarming 13 percent of its gross domestic product (GDP) as against the permissible level of three percent, has also contributed to the fall in the value of the euro. The twin factors have led the riyal gaining significantly against the euro. Lal said the fact that the euro was losing value has had an adverse impact on its demand in the local foreign exchange market. “The demand for the currency is getting lower. It’s not being sold much due to recession in Europe,” he added. Trading circles say a depreciating euro is good news and it would make European imports cheaper. And since Eurozone is a large exporter to Qatar, the impact of the losing currency on the prices here could be much pronounced.