DUBAI • Qatar is still waiting for specific demands from the Saudi-led bloc that has severed ties with the tiny Gulf state, and therefore sees no basis yet for a diplomatic solution, Foreign Minister Mohammed Al Thani said.

Kuwait, the mediator of the dispute, remains in contact with Qatar and the US, AlJazeera TV cited Al Thani as saying yesterday. Qatar is working on humanitarian issues stemming from the “illegal siege”, he said.

Al Thani’s comments come as Qatar tries to play down the impact of a crisis now entering its second week.

Finance Minister Ali Shareef Al Emadi said earlier that the country has enough financial firepower to defend its currency and economy and that the plunge in Qatari assets was a “normal” reaction to moves by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt to cut diplomatic and transport links.

“We’re business as usual and we’re open for business,” he told CNBC in an interview broadcast yesterday.

The Saudi-led alliance is demanding that Qatar distance itself from Iran and stop funding Islamist groups. Qatar denies sponsoring terrorism and accuses the Saudis of seeking to dominate smaller neighbours.

The unprecedented measures have prompted investors and economists to ponder how long Qatar can weather the pressure without having to devalue its currency or sell any of its global assets. Qatar’s sovereign wealth fund, one of the world’s largest, controls stakes in companies from Glencore plc to Barclays plc.

Qatar’s most liquid bonds tumbled last week as its sovereign rating was cut and bets against its currency surged.

“Our reserves and investment funds are more than 250% of gross domestic product (GDP),” Al Emadi, who sits on the board of the sovereign wealth fund, said. “I don’t think there is any reason that people need to be concerned about what’s happening or any speculation on the Qatari riyal.”

The central bank broadcast a similar message of reassurance, saying it had sufficient reserves to meet all requirements and that banks were functioning normally without disruption, state-run Qatar News Agency reported.

Mohamed Abu-Basha, a Cairo-based economist at the EFG-Hermes investment bank, doesn’t see any major risks to the riyal or Qatar’s growth prospects.

“The Qatari government can continue leading economic activity with little interruption,” he said.

The cost of these investments is likely to increase because material can no longer come across the land border with Saudi Arabia, he said.

Yet, while this might expand the country’s budget deficit, that risk is “by no means

life-threatening”, he said. Ratings companies have been less sanguine about the feud’s effect on the economy of the world’s largest exporter of liquefied natural gas.

S&P Global Ratings lowered  Qatar’s long-term rating by one level to AAlast week and put it on negative watch, on concern the country’s finances will be affected. At the same time, it said on Sunday that Qatari

banks are strong enough to survive the pullout of all Gulf money and a quarter of their other foreign holdings.

In a worst case scenario, only two unidentified lenders would have to dip into their investment securities portfolio, S&P concluded.

The biggest danger Qatar faces would be further credit rating downgrades, said EFGHermes’ Abu-Basha. Banks rely on non-resident deposits and foreign borrowing, and additional downgrades could scare away foreign funding and hurt the financial system’s liquidity, he said.

Moody’s Investors Service sees the potential to push up Qatar’s borrowing costs. Qatar’s sovereign credit strength will be hurt primarily on higher funding costs, while a pick-up in foreign investment outflows would drain foreign-exchange reserves, it said.

Al Emadi predicted the countries isolating Qatar will share in the economic pain they’re inflicting on it.

“A lot of people think we’re the only ones to lose in this,” the minister said. “If we’re going to lose a dollar, they will lose a dollar also.” — Bloomberg