October 2, 2007 / 9:29 PM / 10 years ago

Qatar gov't fund has cut dlr exposure by half-PM

DUBAI, Oct 2 (Reuters) - Qatar’s $50 billion sovereign wealth fund has cut its exposure to the dollar by more than half to around 40 percent of its portfolio in the past two years, the country’s prime minister said in an interview aired on Tuesday.

Around 40 percent of the Qatar Investment Authority’s portfolio was invested in euros and another 20 percent in currencies including sterling, Prime Minister Sheikh Hamad bin Jassim bin Jabr al-Thani told CNBC television.

“Before we are almost 99 percent in dollars. Since two years we are 40 percent dollars,” said Sheikh Hamad, who also heads the QIA.

“This is because all our income from oil and gas comes by dollars. So we need some other windows,” he said, explaining the diversification policy. OPEC member Qatar has the world’s third largest gas reserves.

Asked whether the QIA intended to reduce its exposure to the U.S. dollar further, Sheikh Hamad said “Not at the moment, no.”

Last month, Kenneth Shen, the QIA’s head of private equity said in Dubai it was diversifying away from the weakening U.S. dollar by investing more in Asia.

The QIA, which has offered to buy British supermarkets chain J. Sainsbury Plc (SBRY.L), is eyeing investments in countries such as Japan, China, South Korea and Vietnam, he said.

Sheikh Hamad also said the QIA wanted 40 percent of its assets in Asia.

Central banks in the Middle East, the world's largest oil-exporting region are reducing exposure to the dollar, which hit record lows against the euro EUR= and a basket of currencies .DXY on Monday.

The central banks of Qatar and the United Arab Emirates said last year they planned to increase their euro holdings, while Kuwait’s central bank dropped the dinar’s peg to the dollar this year and adopted a basket of currencies to contain imported inflation.

Central banks manage only a fraction of region’s reserves, swollen by the quadrupling oil prices in the last six years.

The QIA, which refuses to disclose the value of its portfolio, manages about $50 billion in assets, Washington-based Peterson Institute for International Economics estimated in a report in August.

The Abu Dhabi Investment Authority, which manages surplus revenues of the world’s sixth-largest oil exporter, has at least $500 billion in assets, according to the report.

The Kuwait Investment Authority had about $213 billion on March 31, according to official figures.

Both the U.S Treasury and the International Monetary Fund said in June they were uneasy about the growing power of such sovereign funds within the world’s financial system.

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