'BOGUS QUOTES'
The Qatari central bank has previously accused unnamed banks of trying to manipulate the riyal by trading it between themselves offshore at artificially weak levels - to create an illusion Qatar's economy was crumbling.
The riyal has been pegged to the U.S. dollar at a rate of 3.64 for more than a decade, but in the initial months of the boycott it traded as low as 3.8950 offshore.
In the letter to the U.S. Treasury, Qatar's lawyers said they suspected NBAD was driving the riyal lower during illiquid periods, such as Islam's Eid al-Adha holidays last year, "reinforcing the manufactured narrative that Qatar's currency was increasingly volatile and its economy was too unstable for investment".
"NBAD's quotes - and those of other banks involved in the manipulation - were likely all bogus," the letter said without naming the banks and referring to foreign exchange quotes posted by NBAD.
"There is evidence that at the same time NBAD was providing quotes with great frequency and at rates lower than the official rate of 3.64, its traders were unwilling to actually transact at those prices," the letter said.
It cited one example on Nov. 22, 2017: when a counterparty reached out to NBAD to execute a deal, it was told by a representative of NBAD that it had no riyal to trade.
FAB declined to comment when asked about the specific allegation.
The letter did not name the counterparty but said the central bank's lawyers were ready to provide regulators with a recorded chat between the two sides, on a confidential basis. It said NBAD stopped quoting the riyal in December after Qatar vowed to investigate.
The central bank also pledged on Nov. 23 to satisfy any market demand for dollars and the riyal has since rebounded in offshore transactions to trade close to its peg.
Many bankers in the region say that with more than $300 billion in central bank reserves and sovereign wealth fund assets, Qatar has more than enough financial firepower to block any attack on its currency.
