The Qatari currency came under pressure on Tuesday as Gulf commercial banks began to hold off on dealing with Qatari banks because of the diplomatic rift in the region, banking sources told Reuters news agency.

However, the Qatari Riyal is pegged by the Qatari Central Bank at 3,64 to the dollar. This means that the central bank will use its foreign currency reserves to ensure the exchange rate does not fall below the 3,64 rate.

Currently, the USD to QAR exchange rate is at 3,6470, which is the lowest since June 2016.

Pressures

Some Saudi Arabian, United Arab Emirates and Bahraini banks were delaying business with Qatari banks, such as letters of credit, after their governments cut diplomatic ties and transport links with Doha on Monday.

Saudi Arabia’s central bank advised banks in the kingdom not to trade with Qatari banks in Qatari riyals, the sources said. The central bank did not respond to a request for comment.

READ MORE: Saudi Arabia, UAE, Egypt, Bahrain cut ties to Qatar

Qatari banks have been borrowing abroad to fund their activities. Their foreign liabilities ballooned to 451bn riyals ($124bn) in March from 310bn riyals at the end of 2015, central bank data shows.

So any extended disruption to their ties with foreign banks could be awkward, though the government of the world’s biggest natural gas exporter has massive financial reserves which it could use to support them.

Banks from the United Arab Emirates, Europe and elsewhere have been lending to Qatari institutions.

Gulf banking sources who declined to be named because of political sensitivities said Saudi Arabian, UAE and Bahraini banks were postponing deals until they received guidance from their central banks on how to handle business with Qatar.

“We will not take action without central bank guidance, but it is wise to evaluate what you give to Qatari clients and hold off until there is further clarity,” said a UAE banker, adding that trade finance had stalled for the time being.

The sources also said the UAE and Bahraini central banks had asked banks under their supervision to report their exposure to Qatari banks. The UAE and Bahraini central banks did not respond to requests for comment.

Qatar reserves

Because of its financial reserves and as long as it can continue exporting liquefied natural gas, Qatar looks likely to avoid any crippling economic crisis.

But credit rating agency Moody’s Investors Service said on Monday that if trade and capital flows were disrupted, the diplomatic dispute could eventually hurt the outlook for Qatar’s debt.

Because of such worries, the Qatari riyal fell in the spot market on Tuesday to 3.6470 against the U.S. dollar, its lowest level since June 2016. The currency is pegged by Qatar’s central bank at 3.64 to the dollar.

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In the one-year forwards market, where traders bet on rates 12 months from now, the riyal traded as low as 275 points, compared with Monday’s close of 250 points and levels around 180 bps before the diplomatic crisis erupted.

A Qatari central bank official, declining to be named under briefing rules, told Reuters the riyal’s dip was due to speculation and that Qatar had huge foreign exchange reserves which it could use if necessary to support its currency.

Beyond Gulf

There were signs that Qatar’s financial ties might shrink well beyond the Gulf. Some Sri Lankan banks stopped buying Qatari riyals, saying counterpart banks in Singapore had advised them not to accept the currency.

In Egypt, which also cut diplomatic and transport ties with Qatar, some banks resumed dealing in Qatari riyals after halting trade on Monday, but others appeared to be continuing to limit transactions with Doha.